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(ACC Mentioned) NPE: Mixed Fortunes for Plastics
Mar 6, 2015 | ICIS
By Lane Kelley, Bill Bowen and Ron Coifman
The challenges faced by the polystyrene (PS) market as the New Year began stemmed from the correction of 2014. -
(ACC Mentioned) Democrats Squabble Over New Chemical Safety Bill Draft
Mar 6, 2015 | PoliticoPro
By Darren Goode
A new bipartisan Senate proposal has intensified divisions among Democrats about a sweeping overhaul of federal oversight of dangerous chemicals. -
(ACC Mentioned) Report Examines Changing Recycling Stream
Mar 6, 2015 | Recycling Today
A report sponsored by the American Chemistry Council’s (ACC’s) Plastics Division and released in March provides insights into recent and anticipated changes in municipal solid waste streams and what they could mean for the recycling industry. -
California AG Raises 'Significant Objection' to Draft TSCA Bill
Mar 6, 2015 | PoliticoPro - Whiteboard
By Darren Goode
The office of California Attorney General Kamala Harris says the latest draft by Sens. Tom Udall and David Vitter to update federal chemical safety law would still go too far in preempting the state’s toxics controls, amid other “serious concerns.” -
Udall Emerges as Key Player as Action Nears on New TSCA Bill
Mar 6, 2015 | E&E - Greenwire
Sen. Tom Udall (D-N.M.) is set to play a key role as Congress takes another stab at updating the Toxic Substances Control Act of 1976 -- even though environmental groups and his colleagues have been uncomfortable with some of his outreach to the chemical industry. -
New York Politicians Reintroduce Bill on Child Safe Products
Mar 6, 2015 | Chemical Watch
After an earlier failed attempt, two members of New york's legislature have reintroduced a bipartisan bill that would empower the state to identify and phase out dangerous chemicals in products marketed to children. -
Legislation to Ban Microbeads Advances in Ind., Colo.
Mar 6, 2015 | E&E - Greenwire
Lawmakers in two states moved closer to banning plastic particles called microbeads from cosmetic products. -
(ACC Mentioned) Market Outlook: The Big Crunch – Oil Rattles Chems
Mar 6, 2015 | ICIS
By Paul Bjacek
The big decline in oil prices will have major implications for global petrochemicals, ranging from shifting levels of competitiveness to future investment -
DOE in 'Early Stages' Of Review on Crude's Chemical Properties
Mar 6, 2015 | PoliticoPro - Whiteboard
By Elana Schor
The Energy Department is conducting a review that could shed more light on questions about the chemical makeup of light Bakken crude involved in a spate of fiery oil-by-rail accidents, a spokeswoman said today. -
Senate EPW Plans State-Focused Hearing on EPA Climate Rule
Mar 6, 2015 | PoliticoPro - Whiteboard
By Erica Martinson
The Senate Environment and Public Works Committee will hold a hearing on Wednesday, March 11 to gather state-level perspectives on EPA’s proposed greenhouse gas rule for existing power plants. -
Should Transmission be Another Building Block for EPA's Climate Plan?
Mar 6, 2015 | E&E - Energywire
By Peter Behr
U.S. EPA's proposed Clean Power Plan, with its four building blocks for reducing carbon emissions, is missing a fifth one -- transmission lines. -
EnergyWire's Soraghan Discusses New Scrutiny Facing Okla. Oil and Gas Wells
Mar 6, 2015 | E&E - TV
With the U.S. Geological Survey recently raising Oklahoma's earthquake count for 2014 by more than 20, the overall rate of earthquakes in the state appears to be on the rise. -
Incentives Could Spur Efficiency -- Report
Mar 6, 2015 | E&E - Greenwire
Commercial investment in green technology could be encouraged if Houston offered better incentives and more financing options, according to a report released by Rice University on Wednesday. -
Train Carrying Crude Explodes in Illinois
Mar 6, 2015 | The Hill - E2 Wire
By Laura Barron-Lopez
A train carrying crude oil derailed and exploded in northern Illinois Thursday afternoon, prompting an evacuation. -
Oil Train Derails in Rural Ill.
Mar 6, 2015 | E&E - Energywire
By Blake Sobczak
A 105-car train hauling crude oil derailed and caught fire in rural Illinois yesterday afternoon, causing no injuries but prompting homes within a mile radius to evacuate, according to local officials and operator BNSF Railway Co.
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(ACC Mentioned) NPE: Mixed Fortunes for Plastics
Mar 6, 2015 | ICIS
By Lane Kelley, Bill Bowen and Ron Coifman
The challenges faced by the polystyrene (PS) market as the New Year began stemmed from the correction of 2014. Demand held steady enough to support a few price increases, but a buyers’ market developed – especially in the western half of the US – from cheaper prices in Asia and from the slump in major feedstocks benzene and styrene.
PS prices dropped by about 5%, and expandable polystyrene (EPS) prices fell by 4% last year, largely from the plunge in oil prices during the second half of 2014 that pulled down feedstock prices.
That trend has continued in 2015, with PS values dropping by about 12% and EPS by 9%. Producers say their customers are just buying what they need and no more. “Nobody’s looking to stock their shelves aggressively,” notes one seller.
Buyers point out that prices have been dropping for some weeks, so it pays to be patient. “The next pound is going to be cheaper,” one buyer asserts.
Such certainty has paid off for buyers since late last summer, with contract prices falling 20% since August – dropping every month from September.
Buyers say producers have not cut prices enough and are pocketing extra margin through the drop in feedstocks instead of passing it on to customers. Buyers follow a rule of thumb that PS prices should drop 1 cent/lb for every 10 cents/lb drop in benzene, which has been fairly accurate over the past half year but still shows a few pennies in cost savings that producers have not passed on to customers.
“There’s a lot of margin still in there now,” says one buyer, noting how PS has not followed the benzene rule exactly.
As for demand, PS and EPS producers say it remains pretty healthy, at least for the early part of the year, and that domestic supplies are fairly tight.
BOTTOMING OUT
Producers also say the market appears to have hit bottom, although the conventional wisdom regarding oil prices is to expect another drop, which would likely affect feedstocks benzene and styrene. An analyst at a plastics conference in February predicted oil prices would dip into the high $30/bbl range in the second quarter this year because of new drilling that has not been factored into production data yet.Still, market analysts project annual growth of 5-6% for both PS and EPS over the next few years, largely on a healthy outlook for fast-food containers and packaging for consumer goods, which remain the largest markets forpolystyrene and its expandable version. The PS food packaging/food service category posted low single-digit growth last year, but most other categories showed declines, according to data from the American Chemistry Council (ACC).
Lower oil prices may mean trouble for crude and petrochemical producers, but they are a boost for consumers – cheaper feedstocks lead to cheaper petrochemical prices which lead to lower prices for a lot of consumer products.
Obstacles remain, however, especially for PS and EPS producers.
A ruling from New York City earlier this year targeted popular products in both markets. New York mayor Bill de Blasio banned products made from PS and EPS in the city. As of 1 July, manufacturers and stores cannot sell or offer single-use foam items such as cups, plates, trays, or clamshell containers in New York City, nor can they sell polystyrene packing peanuts.
The move followed a ruling by the city’s Department of Sanitation (DSNY) that said EPS foam cannot be recycled. DSNY also determined that there currently is no market for post-consumer EPS collected in a curbside metal, glass, and plastic recycling programme. The ban, de Blasio said, would remove nearly 30,000 tonnes of EPS waste from the city’s landfills, streets and waterways.
TRYING NEW PRODUCTS
New York is now the largest US city to ban EPS foam, according to the mayor’s office. The city’s decision prompted Dunkin’ Donuts to put a lid on its trademark styrofoam coffee cups, announcing that it was testing a new double-walled paper cup.The ACC disagreed with the New York move, saying the ban would eliminate polystyrene foam from the city’s curbside recycling programme and that the ban meant most alternative foodservice packaging and foam protective packaging will continue to be sent to landfills instead of being recycled. The ACC statement said there is commercial demand for recycled foam packaging, including foodservice items, with nearly 140 companies that process or use the plastic material in the US and Canada.
The plunge in energy prices may have brought down US polyethylene (PE) values this year, but the industry is still on a roll.
BULLISH ON POLYOLEFINS
LyondellBasell’s new chief executive, Bob Patel, said in a February conference call that he remained “relatively bullish on the demand outlook for polyolefins”, particularly in the US.Patel’s bullishness was backed by record profits reported by LyondellBasell’s North American polyolefins unit in 2014, with PE providing much of the boost.
The producer’s olefins and polyolefins Americas unit accounted for 62% of Lyondell’s total operating income for the year, largely on the sale of PE but also including major feedstock ethylene and a few other derivatives.
A big reason for Patel’s bullishness stems from PE’s profit margin, which hit record highs throughout 2014 but began tailing off when energy prices took a dive late in the year.
But the drop in oil prices seemed just a dip for the producer. LyondellBasell’s earnings data showed that its cost for making ethylene in 2014 averaged about 15 cents/lb ($331/tonne), while the producer sold high-density PE material (HDPE) for an average price of 77 cents/lb.
Many ethylene producers also make PE, taking advantage of cheap production costs made possible by cheap shale gas in the US and North America. Integrated PE producers also have the advantage of not worrying all that much about the cost of ethylene, because they do not buy it.
The ethylene derivative’s extraordinary cost advantage has sparked a boom in new PE plant announcements over the past two years, with 17 planned new PE units in the US, including multiple projects at some sites.
While it seems unrealistic to expect that all of these projects will be built, as a group they represent a total of 8.1m tonnes/year of new capacity. Some will break ground in 2015, for scheduled start-ups in 2016-2017.
Petrochemical observers say there’s a reason why the PE business is so popular. “They’re the only guys out there making any money right now,” says one distributor.
The irony of PE’s status as one of the top money-makers in the US industry – and not just for LyondellBasell but for those other companies that want to build new plants to make it – is that American PE prices are among the highest in the world.
US HDPE prices currently are at least 40% higher than comparable prices in China and Southeast Asia. Over the past two years, US prices have been on average higher than China prices by 15 cents/lb – the difference closely represents the cost of transporting product from China, including port charges, ocean freight, duties, tariffs, inland delivery and other fees.
US contracts continue to fall in a continuing race to catch up with spot prices, but big-volume traders are not buying American material yet.
Imports are a competitive factor, and US producers do export material – roughly 15-25% of their production – for sale at cheaper prices, mainly in Mexico and Central America. US export prices are dropping faster than those for domestic material so producers can compete with other regions such as Latin America, but mainly Mexico, where prices for some PE grades declined by 15% in the first two months of this year.
But the odd status of US PE was noted in a recent analysts’ report that described higher US PE prices as stemming from the willingness of American converters to pay higher prices for railcar delivery rather than import lower-cost bagged material from Asia or Saudi Arabia.
Such a huge profit margin goes a long way in explaining why ethylene and PE are LyondellBasell’s top two products in the Americas. US PE is by far the producer’s largest ethylene derivative, accounting for 70% of the ethylene made by the company in the Americas last year.
Polypropylene (PP) ranks a distant second for LyondellBasell, which sold more than twice as much PE in the Americas last year (5.92bn lbs) as it did PP (2.52bn lb), according to company data.
LyondellBasell intends to keep focusing on its top two products, planning to expand its US ethylene capacity by 25% in the next two years and recently completed a 200m lb/year expansion of its Texas PE plant at Matagorda.
Patel cited a few factors that should strengthen the US’s status as a pre-eminent PE producer.
“We should think about demand improving based on lower oil prices and as emerging markets continue to consume more polyolefins per person,” Patel said. “I would (also) point you to, especially in polyethylene or ethylene and derivatives, to look and see how much new capacity is coming outside of the US, and there is not that much.”
PP PROGRESS
US polypropylene (PP) producers have made some headway this year in their annual quest to expand margins, or what one PP watcher calls “the separation dance.” The dance, called margin expansion, is somewhat like getting off the gold standard in the world of currencies, when Richard Nixon eliminated the US dollar’s backing in gold in the early 1970s and let the dollar float and find its own value, as the dollar continues to do today.The equivalent of the gold standard in the PP market is what might be called the monomer standard. As pertains to PP, the separation dance is about separating the price of PP from the price of propylene.
This separation dance or margin expansion in PP involves a different move in the usual monthly contract negotiation. About 60% of PP contracts are determined by whatever happens with feedstock propylene. In the 14 months that cover all of 2014 and the first two months this year, PP contracts mimicked whatever happened with propylene in 12 of those months. Propylene dropped a penny in April 2014, do did PP; the feedstock dropped three cents in June 2014, so did PP. As goes propylene, so goes PP.
“It’s 90% of the game,” a PP buyer says. “That’s been the history for the past five years.” The exception, the other 10% of the time when the separation dance occurs, has been in January during the past few years when producers take a hard line with customers and lay down the law.
In January 2014, propylene went up four cents/lb but PP contracts rose by five, so producers charged customers an extra penny more than what they normally would have been paid under the monomer standard. ExxonMobil Chemical told PP customers late last year that all shipments on or after 15 December would be raised by 2 cents/lb on all non-metallocene homopolymers and all impact copolymers, at a time when PP contract prices were dropping like a rock.
“This increase is separate from any price change resulting from changes in propylene monomer,” said the ExxonMobil release.
In January this year, propylene dropped a whopping 12 cents/lb, because of plunging oil prices, but most producers – including ExxonMobil – only gave their customers a 10 cent/lb price cut, offsetting the huge monomer drop with some margin for themselves. Some producers even talked customers into taking only a 9 cent/lb cut. So producers doubled their margin this January compared to what they got in January 2014, and a few got three times as much.
LEARNING THE SEPARATION DANCE
Getting off the monomer standard sounds like a naive dance, this idea of getting away from a mundane formula where the price of a feedstock totally determines the price of a derivative. After all, most petrochemical prices are determined largely by their feedstocks and industry pricing is full of formulas. But there is a model for the separation dance, and it is a big one.The role model for PP producers is polyethylene (PE), which has a definite link to the cost of ethylene but is still not as dependent on that feedstock as PP is on propylene. The extra pennies every January have not really been a game-changer for PP, because its margins are just a fraction of those for PE. For an integrated PP producer using naphtha in 2014, the average contract margin was about 9 cents/lb, according to ICIS. For a PE producer using ethane, the average contract margin was more than 62 cents/lb, or more than six times larger.
New York mayor Bill de Blasio banned PS and EPS products
Copyright: Rex Features
That number appeared in LyondellBasell’s latest earnings data, which showed that producer’s cost for making ethylene last year averaged about 15 cents/lb, while the producer sold high-density material (HDPE) for an average price of 77 cents/lb, which provides the 62 cent/lb profit margin. PE’s extraordinary cost advantage has made it the top-ranked ethylene derivative for integrated producers, the plastic with the greatest benefit from cheap ethane derived from shale gas. This has a lot to do with why there are 17 planned new PE units in the US, including multiple projects at some sites, for a total of 8.1m tonnes/year of capacity.
Meanwhile, PP production in the US continues as a fixed-margin business. Maybe if producers could get some of those extra pennies of margin expansion every month they might succeed at the separation dance, but it seems a long shot considering their track record in recent years. The PP market usually comes back to the gold standard, ie, the monomer-plus contract, which follows whatever happens to propylene.
“And the market just keeps beating the margins down, down, down,” a producer says.
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(ACC Mentioned) Democrats Squabble Over New Chemical Safety Bill Draft
Mar 6, 2015 | PoliticoPro
By Darren Goode
A new bipartisan Senate proposal has intensified divisions among Democrats about a sweeping overhaul of federal oversight of dangerous chemicals.
Squabbling between Democratic Sens. Barbara Boxer of California and Tom Udall of New Mexico is complicating the already-complex deliberations on updating the 1976 Toxic Substances Control Act, a landmark law administered by EPA. And that tension may grow because of a New York Times story published Friday, which the bill’s supporters had accurately predicted would include material portraying the chemical industry as driving the effort.
The Senate Environment and Public Works Committee is holding a hearing on the TSCA law March 18, and drafters hope by then to release the latest proposal from Udall and David Vitter (R-La.) — though the bill’s details and timing are still fluid, sources told POLITICO. Even a rough timeline for a markup is unclear, although TSCA reform is among committee Chairman Jim Inhofe’s top five priorities on the panel.
Backers of the bill say it includes significant changes on preempting state laws and imposing user fees on chemical companies from an initial plan introduced by Vitter and the late-Sen. Frank Lautenberg shortly before the New Jersey Democrat died in May 2013. Critics like Boxer say the details don’t match the hype and that it in some ways is even worse than what’s currently on the books.
Udall, a former EPW panel member who is now the top Democrat on the Interior and EPA spending subcommittee, has taken the lead in trying to realize Lautenberg’s long-standing dream of updating TSCA. The new bill — with the blessing of Lautenberg’s widow — will be named the Frank R. Lautenberg Chemical Safety for the 21st Century Act. It’s also a rare case of Democrats working closely with conservatives on updating an EPA law that may have a solid shot of getting through Capitol Hill. Udall and Bonnie Lautenberg will be among those testifying at the March 18 hearing.
But Boxer remains firmly opposed to any preempting of California’s and other states’ chemical oversight laws and has continued to argue that the Udall and Vitter plan doesn’t go far enough especially in protecting those particularly vulnerable to chemicals.
Boxer and Sen. Ed Markey (D-Mass.) are working on their own update to the law.
Beyond the policy differences, the debate continues to churn up palace intrigue.
Even before The New York Times published its story Friday about the drafting of the Udall and Vitter plan, backers of the bill were alleging that it involved an orchestrated attempt by Boxer and her staff to paint the effort as being driven by the chemical industry. (“To me it looks like the chemical industry itself is writing this bill,” Boxer says in a quote prominently featured in the Times’ piece.) Sources said Boxer brought up the upcoming Times article at a gathering of her fellow environment-panel Democrats earlier this week as a warning against cosponsoring the Udall and Vitter bill.
Specifically, backers of the Udall-Vitter bill say Boxer’s office should be held responsible for the Times obtaining a Feb. 20 draft Udall provided to the California Democrat strictly on the condition that it not land in the hands of the media. The draft indicated the American Chemistry Council did have at least some input on the language. POLITICO reviewed one of a handful of similar drafts dated Feb. 20 but it does not specifically suggest direct input by ACC.
A source familiar with the information sharing agreement between senior Udall and Boxer aides said it explicitly said the draft could be shared with outside parties, but that Boxer’s office would be held responsible if the draft made its way to the media. A Senate Democratic EPW aide confirmed that Boxer’s office did share the draft with some experts, including in California, in preparation for a hearing. Boxer was given an updated version Wednesday in preparation for the March 18 hearing and in turn also shared that with California and other officials.
The fracas has escalated to include some Senate Democratic leaders amid complaints that the tactics used by the California Democrat and her staff are undermining an effort of a fellow Senate Democrat, sources said.
This follows Boxer’s decision last September to publicly release a red-linedrevision of a staff working draft that Udall and Vitter had meant to keep private, a tactic which the Louisiana Republican publicly lambasted and privately irked some Democrats.
Aides to Boxer and Udall didn’t comment on any tactical disagreements.
Udall, in a statement to POLITICO, noted that The New York Times two years ago “editorialized about the Lautenberg-Vitter legislation, saying it deserves to be passed.” The latest bill “is even better,” Udall said, and he has “worked hard to bring all of the stakeholders to the table.”
“Previous efforts to improve the law have gone nowhere. And for the first time, we have a bill that can break the logjam and pass,” Udall said. “And not only will our bill significantly improve existing law, but it is the best opportunity we are likely to ever have for another 40 years. We are constantly working to improve it.”
The Environmental Defense Fund is supporting the latest version floated Wednesday, arguing it’s a big improvement over current law. Other green groups, including the Natural Resources Defense Council, and the American Association for Justice, which represents trial lawyers, have provided input but are not backing the latest draft.
“We continue to talk to anyone working on this bill and we continue to have concerns,” said David Goldston, NRDC’s director of government affairs. Goldston declined to detail those concerns before the latest bill has been made public.
In an email, an AAJ spokeswoman said that while the trial lawyers’ association “does not oppose the current draft as it is written, we do not believe this goes far enough to fully protect American families from the dangerous chemicals in our drinking water, children’s toys and consumer products.”
While the intent of any leak to The New York Times may have been to highlight industry input in their proposal, the new Udall and Vitter plan has seemingly steered to the left in several areas since the 2013 Lautenberg and Vitter plan.
Their latest bill, as described by supporters, would grandfather in what states have done prior to this year, while the original Lautenberg and Vitter plan also had more sweeping preemption. The latest version has new language that would exempt state action on low-priority chemicals from federal preemption, which was a top request from the left, a Senate aide said.
But there are disagreements over the extent to which the bill would actually preempt existing state oversight and enforcement, including a contention from critics that it would pre-empt action even earlier than current law and strip away residual state authorities and enforcement.
The latest Udall-Vitter plan also sets up a system that would impose user fees on companies that manufacture and process chemicals to fund EPA’s efforts under the law to review existing and new chemicals, such as safety evaluations. “It’s trying to be as close to fee for service as you can,” a Senate aide said.
The bill’s safety standard would remove from current law the requirement that EPA take the least burdensome path to regulating and classifying chemicals and eliminate the requirement that the agency consider the cost to companies and non-health factors in its decisions.
It also adds a new definition of vulnerable populations to include for the first time pregnant women, infants, elderly and workers in the chemical industry. And it includes new deadlines, including sunsetting the protection of confidential business information.
Boxer had said the earlier September version of their bill contained too many loopholes to help industry delay industry and EPA delay regulation, as well as specific problems with its core safety standard and deadlines.
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(ACC Mentioned) Report Examines Changing Recycling Stream
Mar 6, 2015 | Recycling Today
A report sponsored by the American Chemistry Council’s (ACC’s) Plastics Division and released in March provides insights into recent and anticipated changes in municipal solid waste streams and what they could mean for the recycling industry.
“Making Sense of the Mix: Analysis and Implications for the Changing Curbside Recycling Stream”focuses mainly on plastics and is designed to promote greater understanding among government, material recovery facility (MRF) operators and waste management firms that are working to generate value from postconsumer materials.
Over the last decade, recyclers have had to adjust to a range of changes, from the sharp decline in newsprint to the adoption of larger carts and single-stream collection. The report provides a look at factors that have shaped today’s waste stream and trends that are likely to influence the waste stream in the years ahead. These include growing consumer demand for recycled content in products and packaging; the potential removal of organics, such as food waste, from municipal solid waste; growing interest in mixed waste processing facilities; and the globalization of recycling markets.
“Plastics makers recognize the critical role that recyclers play in the value chain and in sustainable living,” says Steve Russell, vice president of plastics for the ACC, Washington. “The evolving waste stream can create both challenges and opportunities for recyclers, and we want to help them succeed.”
Oregon-based Green Spectrum Consulting LLC and Resource Recycling Inc., Portland, Oregon, authored the report. -
California AG Raises 'Significant Objection' to Draft TSCA Bill
Mar 6, 2015 | PoliticoPro - Whiteboard
By Darren Goode
The office of California Attorney General Kamala Harris says the latest draft by Sens. Tom Udall and David Vitter to update federal chemical safety law would still go too far in preempting the state’s toxics controls, amid other “serious concerns.”
A quick review of a Wednesday draft from Udall and Vitter “causes us to reiterate a number of serious concerns with respect to its excessive displacement of states from the promulgation and enforcement of chemicals health and safety regulations,” Brian Nelson, general counsel in the attorney general’s office, wrote to Senate Environment and Public Works ranking member Barbara Boxer yesterday. Wednesday’s version will be the basis of a March 18 hearing in the EPW panel.
The letter echoes concerns Boxer has raised about the efforts by Udall and Vitter to update the 1976 Toxic Substances Control Act. While Nelson’s letter came only a day after Boxer’s office sent the draft to the AG’s office for review, it cites “significant objections” to three items.
“The most significant and — absent amendment — insurmountable concern” is language in the draft that preempts “state authority to enact new protections with respect to high priority chemicals years before federal regulations take effect,” Nelson wrote.
Backers of the latest Udall-Vitter draft say it would grandfather in state actions up until this year and exempt action on low-priority chemicals from being preempted. Nelson said the low-priority exemption “appears largely illusory.” -
Udall Emerges as Key Player as Action Nears on New TSCA Bill
Mar 6, 2015 | E&E - Greenwire
Sen. Tom Udall (D-N.M.) is set to play a key role as Congress takes another stab at updating the Toxic Substances Control Act of 1976 -- even though environmental groups and his colleagues have been uncomfortable with some of his outreach to the chemical industry.
Udall and Sen. David Vitter (R-La.) are expected to put forward their latest version of a bill to update the chemicals law in the upcoming days. The chemical industry wants Congress to update the regulations, but wants to do so on its own terms.
Lawmakers are planning to invoke the legacy of the late Sen. Frank Lautenberg (D-N.J.), who for years introduced a more restrictive TSCA reform bill that never won GOP support, before partnering with Vitter in 2013 just weeks before his death. Lautenberg's widow, Bonnie Englebardt Lautenberg, and Udall are expected to testify at a Senate hearing later this month on the bill.
Industry groups have said they need to make quick progress on the bill this year before Vitter, a key ally, becomes occupied with his Louisiana gubernatorial campaign and other lawmakers shift interest to the upcoming presidential election (E&E Daily, March 4).
Udall said he's taking an appropriate, pragmatic approach to updating the law -- though it has yet to win the support of Sen. Barbara Boxer (D-Calif.) and most environmental organizations.
"I am fighting for our children and trying to make sure they are not being pumped full of chemicals in the next generation," Udall said. "We can't do something that is pie-in-the-sky; we have to deal with the reality" (Eric Lipton, New York Times, March 6). -- SP
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New York Politicians Reintroduce Bill on Child Safe Products
Mar 6, 2015 | Chemical Watch
After an earlier failed attempt, two members of New york's legislature have reintroduced a bipartisan bill that would empower the state to identify and phase out dangerous chemicals in products marketed to children.
Bill S 4102 is being promoted by senator Phil Boyle (Republican-Bay Shore) and Assemblyman Steve Englebright (Democrat-East Setauket). If passed, it would establish a list of priority and high-concern chemicals, based on scientific evidence that they could cause major health problems.
Within a year of the list's publication, product manufacturers would be required to report any use of the substances in their merchandise, and from 1 January 2018 no one would be allowed to distribute or sell any children's product containing a priority chemical.
Chemicals affected by the bill, known as the Child Safe Products Act, include arsenic, benzene, cadmium, cobalt, formaldehyde and mercury.
Announcing the bill, Mr Englebright, who is Assembly Environmental Conservation Committee Chair, said New York state currently "prohibits the use of dangerous chemicals on a chemical-by-chemical basis. The President’s Cancer Panel reported that nearly 80,000 chemicals are used in the country today, many of which are unstudied and largely unregulated. We need to act now to protect our children’s health and the environment from unnecessary toxic chemicals found in products designed for them.”
However, toy industry groups say that manufacturers already follow federal safety rules, and that if the bill passes there could be job losses.
David Garriepy, director of state government affairs for the Toy Industry of America, told the Associated Press that well-intentioned, state-based regulations could create a confusing patchwork of requirements for toy makers. He added that just because a particular chemical is present in small amounts doesn't mean it's a health threat. In a reference to similar bills in other states, he said: "We've stepped up as an industry. We want to make sure toys are safe in New York –and Connecticut, and California, and Oregon."
An attempt to pass a similar bill in New York in June 2014 failed to make it to the state Senate floor, despite having being passed by the state assembly with large bipartisan support.
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Legislation to Ban Microbeads Advances in Ind., Colo.
Mar 6, 2015 | E&E - Greenwire
Lawmakers in two states moved closer to banning plastic particles called microbeads from cosmetic products.
A legislative committee in Indiana approved a bill to phase out the sale and production of cosmetics containing microbeads from 2017 to 2019. The bill has not seen any opposition, in part because companies are shifting away from the material.
Microbeads are "the hidden killer, you might say," state Rep. Patrick Bauer (D) said (Lauryn Schroeder, AP/Seattle Post-Intelligencer, March 5).
A Colorado Senate committee also yesterday approved 4-1 a bill to ban microbeads by 2020, with the support of large companies like Johnson & Johnson. The bill passed the House earlier this year (Colorado Springs Gazette, March 5). -- SP
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(ACC Mentioned) Market Outlook: The Big Crunch – Oil Rattles Chems
Mar 6, 2015 | ICIS
By Paul Bjacek
The big decline in oil prices will have major implications for global petrochemicals, ranging from shifting levels of competitiveness to future investment
About 18 months ago, we singled out a disruption pattern that has finally arrived as the chemical industry is experiencing plummeting world oil prices, which means that changes to competitiveness, investment and trade patterns in chemicals are inevitable.
Industry observers will do well to watch out for reduced competitiveness of China coal-to-chemicals operations, increased competitiveness of cracking in Europe, expanded participation of oil companies in chemicals, escalated mergers and acquisitions (M&A) activity and other disruptions.
What’s happening with oil prices?
High crude oil prices over the past several years, coupled with low gasprices in North America caused oil producers to invest heavily in developing oil. Now oversupply is apparent. In order to ensure strong prices longer term, OPEC producers let oil prices drop by maintaining certain production levels, with the objective of forcing out the highest cost supplies.So far, US production has continued unabated, though production is expected to decline later in the year (as unconventional wells drilled in 2014 ramp up, then slow down, since production tails off by two-thirds in the first year). Future increases will likely taper due to the drop in drilling rig count since September, when crude prices were heading below $80/bbl.
When will oil prices rebound?
While US shale oil is responsible for most new world production in recent years, most wells are estimated (by various analysts) to span somewhere in the middle of the global oil production cost curve, with higher cost oil being, for example in the Caspian, the deep waters in Latin America, in the Arctic and Canadian oil sands.With Saudi Arabia’s $750bn in foreign exchange reserves (about 3.5 to 4 times their lost annual revenue from the 50% oil price decline) and low production costs, they have the fortitude to meet their objective. Low oil prices will likely continue until enough wells and projects are shut down. However, estimates of how long it will take to reverse the direction of crude oil prices range from a few months to a few years. So far, one independent producer has declared bankruptcy. Large international oil companies (IOCs) are expected to do better, as they scrutinise long-range plans under various oil price scenarios, even as low as $40/bbl.
However, the resilience and technology of the North American industry should not be underestimated. It is clear from data published by exploration and production (E&P) companies that unconventional well development costs continue to decline. At the same time, as drilling rig counts decline, talent and other inputs are becoming available, contributing to lower development costs.
How does this impact shale gas?
Low oil prices may slow adoption of natural gas in new end-markets, such as marine and land transportation. Also, there is a greater risk of liquefied natural gas (LNG) export customers switching to oil.The first of 14 LNG export terminals are planned to start in 2015, with the industry hoping for a boost in gas prices from current very low levels of $2.93/MMBtu. One terminal, scheduled for 2018, has already been put on hold. Without an outlet for natural gas, prices may not recover for a long time. This would be good for North American petrochemicals in the short term. However, over the longer term, producers will be forced to reduce E&P, impacting future supply. This would also reduce the future availability of natural gas liquids (NGL)ethane, propane and butane, thereby increasing NGL costs for North American petrochemicals.
Impact ON GDP/chemicals demand
The drop in oil price can be seen as a shift in wealth. A drop of $60/bbl on world production of 90m bbl/day equates to about a $2 trillion shift from oil producers (companies and countries) to consumers/consuming countries. This is equivalent to 2.8% of GDP.Economists are counting on a wealth multiplier effect from consumers to be better than that of oil companies when they spend and allocate capital. The theory is that lower energy prices increase consumers’ discretionary income via savings on gasoline, electricity and home heating.
Of course, North American consumers were benefiting from low natural gas prices already for several years and the reduced gasoline prices in November/December, have so far not translated into greater retail sales.
Consumers may be saving and working off debt. In addition, reduced energy industry spending has already had a large negative effect, amounting to thousands of layoffs in oilfield services, steel and other industries.
Naturally, economies dependent on oil exports (e.g., OPEC countries), will suffer from oil price declines and countries with net energy imports, such as China and Japan, will benefit greatly. However, the world economy is still suffering from high private and public debt, taxes, unemployment and poor fiscal policies, as headwinds. The lower oil price regime may not rescue the situation.
Impact on investment
This brings us to the chemical industry. The American Chemistry Council (ACC) refers to the relative competitiveness of gas cracking to naphtha cracking at an oil/gas ratio of 7. Based on natural gas prices of the past few months, oil would need to be in the $20-30/bbl range to make naphtha cracking more favourable.However, low oil prices also have other global impacts. Chinese coal-to-chemicals plants depend on a high spread between coal and oil prices. Most plants are located inland China, where the cost of coal is low, due mainly to logistics constraints (“stranded coal”). Although economics vary among coal-to-chemicals plants, reports are that some become uncompetitive at oil prices below $70/bbl. While there is an oversupply of coal in the Chinese market (China has among the largest world reserves), the Chinese reserves to production ratio is only 31 years, indicating upward price pressure on coal longer term.
Low oil prices also impact ethylene economics in the Middle East, for crackers using liquids feedstock, which can have a discount of 25% to 30% off international condensate/naphtha prices. Naphtha prices fairly track crude oil. So a decrease in crude oil price of 50% erodes the level of the discount as well, shaving competitiveness against the world ethylene cost curve.
Another factor affecting chemical trade is the strength of the US dollar, which is making European cracking more competitive, causing the Middle East to shift more material, otherwise destined for Europe, to go to Asia.
Several other factors are causing the world ethylene cost curve to flatten. Some of this is occurring quickly; others are more long term.
Liquefied petroleum gas (LPG) can also be used as a cracker feedstock and to dehydrogenate to propylene. Increased supply of US LPG to Europe and Asia is reducing LPG prices globally. This is already improving cracking competitiveness in Europe.
Many analysts are projecting an excess of ethane in North America and increased ethane rejection (i.e., leaving it in natural gas), which has limits, encouraging innovation in ethane exporting schemes. Exporting ethane in larger volumes reduces its landed cost, especially as very large ethane carriers (VLECs) are built and logistical improvements are made. This way, US-sourced ethane will lower the feedstock cost to several European and India crackers.
Potential gas pipelines to the Americas west coast (possibly via Texas to Mexico) could reduce the cost of ethane, propane or natural gas exports to Asia. Railroad tank cars for natural gas are also in development.
Excess US condensates are being exported and this could improve overseas naphtha cracker competitiveness. New uses for gas and NGLs may aid gas price increases.
After the Big Crunch
In the past, when waves of investment occurred in the chemical industry to harness a particular advantage, the first movers where able to achieve the greatest value by securing a position early, being attentive to construction timing (faster paybacks) and locking up finance, equipment and talent before others.A situation of delays and cancellations may happen in petrochemicals as cost curves flatten and demand weakens. Although North American gas cracking can still be at the low end of the cost curve, within time, margins may no longer justify large numbers of projects over short periods. Future plant additions may be more distributed, with perhaps some already announced projects pushed out.
Another disruption may occur in the short term – petrodollars being shifted to petrochemicals. This situation happened in past oil price declines. During low oil price times, petrochemical segment profits are more prominent in IOC portfolios and those segments become targets for capital allocation. This can bring about greater IOC market share in petrochemicals, making integration an increasingly important basis of competition.
Planning implications
With the many variables that will shape competitiveness in the next few years, some prudent actions include:Ensuring that plans adequately withstand the extremes of possible hydrocarbon, geographic, political and economic scenarios.Having a clear view of which customers and geographies to serve, including supply chain alternatives and anticipated product specifications and service levels.Building assets beyond the feedstock advantage, to include technology enhancements for reduced maintenance costs and downtime, on top of improved safety and environmental compliance.Paul Bjacek is the research lead for Accenture Chemicals and Natural Resources. He has more than 20 years of experience in the process industries, including project activities in manufacturing, marketing and distribution. Prior to joining Accenture in 2004, Paul was affiliated with SRI (formerly Stanford Research Institute) and Chevron.
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DOE in 'Early Stages' Of Review on Crude's Chemical Properties
Mar 6, 2015 | PoliticoPro - Whiteboard
By Elana Schor
The Energy Department is conducting a review that could shed more light on questions about the chemical makeup of light Bakken crude involved in a spate of fiery oil-by-rail accidents, a spokeswoman said today.
The DOE review, first discussed last year at a congressional hearing by Assistant Secretary Chris Smith, is part of the department’s role “as a resource for identifying knowledge gaps in the chemical properties of various forms of crude oil,” the spokeswoman said in a statement. The spokeswoman declined to elaborate on a target date for completion of the review but said DOE “plans to share this research with relevant agencies when it is completed. This Energy Department analysis may be of use to the Department of Transportation, which has regulatory authority over the transport of crude oil.”
DOT is in the final stages of writing crude-by-rail safety regulations that do not include minimum volatility or stabilization standards for crude from the Bakken and other shale plays where light-end hydrocarbons are more prominent in extracted fuel. North Dakota is moving ahead with its own separate state stabilization measures. -
Senate EPW Plans State-Focused Hearing on EPA Climate Rule
Mar 6, 2015 | PoliticoPro - Whiteboard
By Erica Martinson
The Senate Environment and Public Works Committee will hold a hearing on Wednesday, March 11 to gather state-level perspectives on EPA’s proposed greenhouse gas rule for existing power plants.
Witnesses from Wisconsin, Wyoming, Indiana, California and New York will testify. They include: Ellen Nowak, chairperson, Public Service Commission of Wisconsin; Todd Parfitt, director of the Wyoming Department of Environmental Quality; Thomas Easterly, commissioner of the Indiana Department of Environmental Management; Mary D. Nichols, chairman of the California Air Resources Board; and Michael J. Myers, top environmental litigation official in the office of the New York State Attorney General.
The hearing will be at 10 a.m. in Dirksen Senate Office Building room 406. -
Should Transmission be Another Building Block for EPA's Climate Plan?
Mar 6, 2015 | E&E - Energywire
By Peter Behr
U.S. EPA's proposed Clean Power Plan, with its four building blocks for reducing carbon emissions, is missing a fifth one -- transmission lines.
So say advocates of an expanded high-voltage power grid that could create more pathways to replace generation from the coal-fired plants that would be retired under the CPP.
States are two or three years away from redesigning their electricity industries to meet the CPP's goal -- assuming the plan goes forward. If additions of new power plants, transmission lines and gas pipelines don't get underway until then, EPA's interim compliance deadline of 2020 can't possibly be met, many state officials and grid managers warn. There will be grid reliability issues even if EPA stretches out the deadlines when it announces a final plan, expected this summer, the plan's challengers say.
So get started now by launching strategic, flexible transmission projects that increase the grid's capacity even as state or regional CPP plans are under development, says WIRES, a lobbying group of 13 major transmission operators, renewable energy companies and diversified utilities.
"Indeed, well-planned transmission may eliminate some of the risk and cost of the CPP," WIRES counsel James Hoecker said in a statement for a Federal Energy Regulatory Commission technical conference last month on the EPA plan.
"We certainly know where the oldest and least efficient coal plants are. We know where the best wind resources are," said Johannes Pfeifenberger, principal with the Brattle Group consulting firm.
For example, of 269 gigawatts of coal units in the Eastern Interconnection, the synchronized grid east of the Rocky Mountains, roughly one-third is located in five states -- Indiana, Illinois, Ohio, Pennsylvania and West Virginia -- according to a study by ICF International. The average age of the coal plants in these states is nearly 50 years, and many are smaller units without pollution controls, the prime candidates for retirement under the CPP's carbon limits and EPA's air toxics pollution standard, the ICF report said.
"We know a lot about the basic fundamentals that will be in place" as the CPP takes shape, Pfeifenberger added. "You could plan a grid that would do a good job for almost all of the future scenarios" resulting from the Clean Power Plan, he said.
Standing in the way of a pre-emptive grid expansion are high hurdles of practice, policy and politics, experts note.
The Federal Power Act, the law underpinning FERC policy, says the commission should approve new interstate transmission projects only when there are demonstrable reasons tied to concrete benefits for consumers, said Sue Sheridan, president and chief counsel at the Coalition for Fair Transmission Policy (CFTP), which represents major power providers in Arizona, New Jersey, Michigan, and the Southeast and Pacific Northwest.
"Our concern is that the cost of the lines be assigned consistent with the Power Act, and we would wish to have Congress clarify for FERC that benefits [of new projects] should be identifiable" and meaningful, Sheridan said in an interview.Seeking latitude
While WIRES has pressed FERC and Congress to find latitude in the Federal Power Act for an expanded, flexible grid, with costs shared broadly by consumers, CFTP's position is diametrically opposed. Its members, presenting stiff opposition to FERC policies in the Southeast and Northwest, say consumers should pay for new transmission projects only when the benefits to them are clear and particular, by either reducing electricity costs or relieving strain on the grid.
E&E's Power Plan Hub keeps you up to date on the latest national and state-level developments on EPA's greenhouse gas regulations for the power sector. Go to E&E's Power Plan Hub.
Does the CPP change this long-running debate within the industry about the justification for big transmission projects?
Pfeifenberger argues that it does. "Clearly, the world is moving toward some sort of more environmentally stringent regulations" of greenhouse gases, he said. The dilemma is how to plan for that uncertain future.
"Most transmission planning is scaled to a reliability mindset," Pfeifenberger said. Grid planners want to base new transmission projects on a clear picture of what power flows will look like at some specific future date. "Fixing one specific need at a time -- it's a Band-Aid approach without asking, is there a bigger picture we should be considering."
Traditionally, transmission planning assumes normal weather and operating conditions, he said. "The planning studies are never done with a polar vortex, or a California power crisis, or a major nuclear outage in mind. We don't know what the damage from a cyberattack might look like.
"If it takes five to 10 years to build a transmission line, waiting until you know for sure what the future will look like almost assures you will have higher-cost solutions. If transmission is a way to reduce costs in the system, then you have to build it ahead of time," Pfeifenberger said. A forthcoming Brattle Group study for WIRES will make that case, he said.
If transmission policy should evolve to recognize climate threats, who has the authority to change it -- Congress, a protector of state interests or FERC? Is this another front in the battle over federal and state powers, now raging over health care and immigration?
In its controversial Order 1000, FERC said major new transmission projects can be justified if they fulfill policy goals such as state renewable energy requirements, adding this to the traditional justifications of improving reliability and lowering consumer costs.
Hoecker argues that FERC has the authority under the Federal Power Act to extend the rationale of Order 1000 to cover advance planning for the Clean Power Plan.
"The fact is, transmission is key to not only doing what the CPP wants to do, but what FERC wants to do under Order 1000," said Hoecker, a former FERC chairman.Who pays?
"FERC has adopted a policy on which I think Congress and the industry agree -- that beneficiaries ought to pay for transmission. But how do you determine who's a beneficiary? If you ask a half-dozen different utility executives how that's supposed to work, you get a half-dozen different answers. FERC hasn't really defined what a benefit is, or how it is supposed to be measured in the planning process.
"It's going to be a specific problem concerning the CPP. Here we have a changing generation mix. Transmission has to be built to get it to market. It will be driven by public policy. ... Who pays? That argument will go on forever unless FERC steps up," Hoecker said.
Sheridan responded that as much as CPP supporters would like to see FERC and EPA support each other, they operate under different laws. EPA is an administration agency. FERC is an independent regulator.
"The Power Act is based on utilities filing rate proposals [for specific transmission projects]. ... The bottom line is, you have to file a rate proposal to get approval from FERC on whether or not you collect the charges" from consumers, she said.
EPA, employing the Clean Air Act for climate policy, "has to grapple with a different world. The statutory regimes have very different purposes," Sheridan said.
"We're finally at the joining of that issue," and it is big enough to call for Congress to step in, she said. "I just don't know whether the Congress has its arms around these questions."
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EnergyWire's Soraghan Discusses New Scrutiny Facing Okla. Oil and Gas Wells
Mar 6, 2015 | E&E - TV
With the U.S. Geological Survey recently raising Oklahoma's earthquake count for 2014 by more than 20, the overall rate of earthquakes in the state appears to be on the rise. Is the increase connected to Oklahoma’s oil and gas operations? On today's The Cutting Edge, EnergyWire reporter Mike Soraghan discusses his latest reporting on the regulatory steps being taken in Oklahoma as a response to the surge in earthquakes.Transcript
The transcript for this video is currently not available. Please check back later.
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Incentives Could Spur Efficiency -- Report
Mar 6, 2015 | E&E - Greenwire
Commercial investment in green technology could be encouraged if Houston offered better incentives and more financing options, according to a report released by Rice University on Wednesday.
In October 2014, business and city leaders met at the Houston Energy Efficiency in Buildings Laboratory to discuss how to increase energy savings in the commercial sector to at least 30 percent.
The savings would contribute more than $500 million to the local economy.
The report focuses on lower-tier building owners who have been reluctant to invest in green technology, saying being energy-efficient makes good business sense.
In Houston, top-tier office buildings already commonly adhere to green building practices, competing for certifications from the U.S. Green Building Council's Leadership in Energy and Environmental Design program. But the report says there is room for improvement in the lower-tier residential buildings, because landlords and tenants are often unaware of the benefits of energy efficiency.
The report suggests incentives like energy service agreements that reward companies for using less energy. It also recommends that the city raise awareness about pre-existing initiatives and publicize how much companies can save by being more energy-efficient (Erin Mulvaney, Houston Chronicle, March 4). -- AW
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Train Carrying Crude Explodes in Illinois
Mar 6, 2015 | The Hill - E2 Wire
By Laura Barron-Lopez
A train carrying crude oil derailed and exploded in northern Illinois Thursday afternoon, prompting an evacuation.
Everyone within a one mile radius was asked to evacuate, after the train burst into flames, The Associated Press reports.
The BNSF Railway train was carrying crude oil from the Bakken formation in North Dakota and had 103 cars loaded with oil.
No injuries were reported and a cause has yet to e determined.
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Oil Train Derails in Rural Ill.
Mar 6, 2015 | E&E - Energywire
By Blake Sobczak
A 105-car train hauling crude oil derailed and caught fire in rural Illinois yesterday afternoon, causing no injuries but prompting homes within a mile radius to evacuate, according to local officials and operator BNSF Railway Co.
At least two tank cars caught fire and continued burning through the evening, Jo Daviess County emergency responders said in a statement yesterday. The derailment occurred at about 1:20 p.m. CST south of Galena, Ill. Local media broadcasts showed flames and dark smoke billowing up from the scene.
The derailment follows a string of damaging crashes involving crude oil. Last month, a CSX Corp. train carrying 107 loaded oil tank cars jumped the tracks and caught fire near Mount Carbon, W.Va., injuring one person, destroying a home and prompting hundreds to evacuate.
In July 2013, a 72-car train laden with crude from North Dakota's Bakken Shale play derailed and exploded in Lac-Mégantic, Quebec, killing 47 people.
BNSF moves hundreds of thousands of barrels each day out of the Bakken Shale play, where the oil in yesterday's accident originated. The company said it had notified the Federal Railroad Administration and investigators at the National Transportation Safety Board of the incident.
BNSF spokesman Michael Trevino added that the railroad would establish a claims center for affected residents and "sincerely regret[s] the inconvenience this event has caused to the community."
The freight giant, owned by Warren Buffett's Berkshire Hathaway, has been involved in crude oil accidents in the past. In December 2013, a BNSF oil train collided with a derailed train carrying grains near Casselton, N.D., triggering a huge explosion visible from the small town.
North Dakota regulators have since ordered drillers to "condition" Bakken crude before moving it by rail, thus making it less volatile. Those rules are set to take effect next month.
Yesterday's derailment is likely to add pressure on the White House to finish a "comprehensive" crude-by-rail safety rule now undergoing a cost-benefit analysis. Those regulations, scheduled to be published this May, will update decades-old standards for cars carrying oil.
Like recent oil train derailments in Mount Carbon and Ontario, the accident near Galena involved tank cars built to a tougher standard in place since 2011.
The recent spate of explosions tied to those newer CPC-1232 cars has drawn congressional scrutiny.
Several U.S. politicians, including Sens. Maria Cantwell (D-Wash.) and Charles Schumer (D-N.Y.), have criticized the pace and extent of the crude-by-rail rulemaking.
Environmentalist groups have also pressured the Obama administration to expedite review of the rule and ban the oldest, most puncture-prone tank cars.
"The only thing more mind-boggling than three such accidents in three weeks is the continued lack of action by the Obama administration to protect us from these dangerous oil trains," said Mollie Matteson, a senior scientist at the Center for Biological Diversity, in an emailed statement yesterday.
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