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An Unfortunate Oversight
Apr 27, 2015 | Chemistry World
By Mark Peplow
Every year, the public relations firm Edelman produces a ‘trust barometer’ that surveys public attitudes to governments, industries and other institutions around the world. -
Bipartisan TSCA Reform Bill Set for Tuesday Markup
Apr 27, 2015 | PoliticoPro - Whiteboard
By Elana Schor
A compromise proposal to reform decades-old federal chemical safety laws is headed for a markup in the Senate Environment and Public Works Committee on Tuesday, setting the stage for some tension for Democrats between backers of the bill and liberals who decry it as too weak. -
Dem Preps Senate's Third Data Breach Bill
Apr 27, 2015 | The Hill - Cybersecurity
By Cory Bennett
The Senate this week could see yet another contender in the data breach legislative push. -
(ACC Mentioned) US to Launch Blitz of Gas Exports, Eyes Global Energy Dominance
Apr 26, 2015 | Telegraph
By Ambrose Evans-Pritchard
The United States is poised to flood world markets with once-unthinkable quantities of liquefied natural gas as soon as this year, profoundly changing the geo-politics of global energy and posing a major threat to Russian gas dominance in Europe. -
For U.S. LNG, is the Window Half Open or Half Closed?
Apr 27, 2015 | E&E - Energywire
By Jenny Mandel
After years of work behind the scenes, the United States has four liquefied natural gas export projects under construction, several more facing final investment decisions in the coming months and the first LNG cargo slated to ship from Cheniere Energy's Sabine Pass, La., terminal before year's end. -
Fla. Senate Advances Bill to Shield Fracking Chemicals
Apr 27, 2015 | E&E - Energywire
A divided Florida Senate passed a bill that would enable oil and gas companies to shield chemicals used in hydraulic fracturing, which builds on a slew of pending legislation designed to regulate the production method. -
Letter: Dangers of Drilling in Earthquake-Prone Areas
Apr 27, 2015 | The New York Times
By Shaye Wolf
Oklahoma is hardly the only state on shaky ground because of underground injection of hydraulic fracturing flowback and other oil waste (“Oklahoma Recognizes Role of Drilling in Earthquakes,” news article, April 22). -
Okla. Scientists Suspected Quakes Linked to Oil 8 Years Ago
Apr 27, 2015 | E&E - Energywire
By Mike Soraghan
The Oklahoma Geological Survey jolted the national drilling debate last week when it announced oil and gas activity was "very likely" causing the earthquakes plaguing the state. -
Lawsuit Pushes EPA to Decision on Toxic Emissions Disclosure
Apr 27, 2015 | E&E - Energywire
By Ellen M. Gilmer
U.S. EPA last week signaled plans to decide on the contentious question of whether oil and gas drillers should be required to make disclosures on a federal pollution database. -
States Press Argument that Comment Period on EPA Rule is 'A Sham'
Apr 27, 2015 | E&E - Greenwire
By Jeremy P. Jacobs
More than a dozen states Friday said recent remarks from U.S. EPA Administrator Gina McCarthy show the agency has already made up its mind about its proposed greenhouse gas standards for existing power plants and reiterated their call for a federal court to block EPA from promulgating the rules. -
Nuclear Industry Pushing for Changes to Obama’s Climate Rule
Apr 27, 2015 | The Hill - E2 Wire
By Devin Henry
As the Obama administration moves to finalize its climate rule for power plants this summer, the nuclear industry is pushing for major changes to the components of the plan. -
Okla. Response to Clean Power Plan Gains Traction
Apr 27, 2015 | E&E - Energywire
Oklahoma's attorney general would be able to sign off on the legality of any state plan dealing with federal carbon emissions regulations for power plants according to a state Senate bill passing through the Legislature. -
Energy Spending on the House Floor
Apr 27, 2015 | PoliticoPro (Morning Energy)
By Darius Dixon
The House doesn’t gavel back into session until tomorrow but the chamber is poised to take its $35.4 billion fiscal 2016 energy and water spending bill to the floor this week. -
Week ahead: Moniz Takes Energy Infrastructure Pitch to Congress
Apr 27, 2015 | The Hill - E2 Wire
By Devin Henry
Energy Secretary Ernest Moniz is making a pitch for the Obama administration’s energy infrastructure plans on Capitol Hill. -
Obama’s Energy Chief Sees Common Ground with GOP
Apr 27, 2015 | The Hill - E2 Wire
By Devin Henry
Energy Secretary Ernest Moniz said he expects at least some cooperation from congressional Republicans on a handful of administration goals before President Obama’s term expires. -
Energy Secretary Moniz Emerges as Obama’s Secret Weapon in Iran Talks
Apr 27, 2015 | The Washington Post
By Steven Mufson
The Energy secretary’s job title has always been a bit of a misnomer. Nearly two-thirds of the department’s budget has nothing at all to do with energy. -
EPA Critics Revive ‘Health-Health’ Analysis To Fight Stricter Ozone NAAQS
Apr 27, 2015 | InsideEPA
By Stuart Parker
Critics of EPA’s proposed stricter ozone national ambient air quality standard (NAAQS) are reviving the idea of using a “health-health” analysis -- balancing health benefits of a stricter standard against health costs -- to help undermine the case for tightening the limit and circumvent a legal bar on considering costs in setting NAAQS. -
California Air Officials Float Plan To Ease Ozone NAAQS Implementation
Apr 27, 2015 | InsideEPA
By Stuart Parker
Officials with California’s San Joaquin Valley air district are floating a draft legislative proposal for Congress that they say would ease implementation of a potentially stricter EPA ozone national ambient air quality standard (NAAQS) by giving certain areas out of attainment with the standard more time to cut pollution and meet it. -
OSHA, Industry Groups Warn about Oil Tank Deaths
Apr 27, 2015 | E&E - Energywire
By Mike Soraghan
Federal worker safety officials and drilling industry groups are warning about the danger of petroleum vapors whooshing from crude oil tanks at well sites.
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Apr 27, 2015 | Chemistry World
By Mark Peplow
Every year, the public relations firm Edelman produces a ‘trust barometer’ that surveys public attitudes to governments, industries and other institutions around the world. The results don’t make happy reading for the chemicals industry: this year, it gained one of the lowest trust ratings among technology-based businesses, similar to banking and – ahem – the media.
Transparent and effective third-party oversight is one of the surest ways of securing trust in an industry. Yet in the US, where chemicals are regulated under the Toxic Substances Control Act (TSCA, pronounced ‘Tosca’), that oversight is sadly lacking.
Several efforts to reform the act have foundered in recent years, deadlocked by partisan politics. Now US politicians are taking another crack at rewriting their chemicals legislation, and claim that this is the best opportunity ever to reform TSCA. Industry and consumers alike should fervently hope that they succeed.The burden of proof
TSCA empowers the US Environmental Protection Agency (EPA) to assess the health and environmental risks of chemicals used in consumer products and industrial processes (food, drugs, cosmetics and pesticides are regulated separately). When the act was passed in 1976, chemicals already on the market were assumed to be safe unless the agency could prove otherwise. But henceforth, manufacturers had to alert the EPA if they planned to launch new products, so that the agency could assess them in advance.
In principle, TSCA offered a much-needed tightening of regulation. In practice, the EPA has not had the funding, nor the political clout, to enforce proper oversight. The agency has always struggled to persuade industry to release the data needed to make a proper risk assessment; and it has been hamstrung by TSCA’s stipulation that the economic impact of restricting a chemical must also be considered – this was at the root of the agency’s failure to ban asbestos for a wide range of construction uses.
There are now more than 80,000 different chemical products on the market in the US, and in almost 40 years the EPA has significantly restricted the sale of fewer than 10 of them. This tally does not reassure the public that the remaining 79,990 are entirely benign.
‘The burden of proof should lie with those who stand to profit’
It’s not just environmental groups that say TSCA is ripe for reform – industry is eager for change too. One of the consequences of ineffective national legislation is that individual states often take it upon themselves to ban particular chemicals, creating a confusing patchwork of standards across the country.
There is also a consensus that the burden of proof should shift: rather than requiring the EPA to prove a product poses an ‘unreasonable’ risk, manufacturers should show it is ‘reasonably’ safe.
‘Reasonable’ is a slippery term, and two competing bills are trying to pin it down in different ways. The first gives the EPA more power to investigate chemicals that are already on the market. But critics complain that it is too industry-friendly, and would strip states of their regulatory powers.
The second goes further, imposing a stronger test – ‘reasonable certainty of no harm’ – and states could continue to enact their own restrictions. Supporters of each bill have already clashed at hearings in March, and a final vote is expected in summer.Crucial compromise
Done right, improved chemicals legislation could offer greater protection to consumers and boost confidence in the industry. It could also ease trade, by bringing US regulations in line with those in the European Union. The EU’s Registration, Evaluation, Authorisation and Restriction of Chemicals (Reach) legislation, which came into force in 2007, already demands that industry supply the evidence needed to regulate its products.
Reach is far from perfect. Its leviathan bureaucracy can be costly for smaller businesses to navigate, and it is still too easy for businesses to use animal toxicity tests where good alternatives exist. Broadly, though, the regulation is working. Whatever its shortcomings, it is widely recognised as the most comprehensive chemicals regulation system in the world, and despite early gripes industry seems to be getting on with it.
It is absolutely right to place the burden of proof squarely on those companies who stand to profit from these products. But a change in the law will do no good if the EPA does not have the tools and funding it needs to do its job properly. Industry should pay its fair share of the costs of ensuring that its products are safe. The EPA must also formulate a clearer strategy for working through the backlog of chemicals of highest concern, emphasising the need to develop faster, animal-free techniques. EPA-led high-throughput screening programmes such as ToxCast and Tox21 have already advanced the science of predictive toxicology, and they should play an important role in a revamped TSCA.
Above all, industry must accept that it may not get all the concessions it wants. That may include allowing states to continue regulating chemicals autonomously, at least until improved national regulations are shown to be effective. Meanwhile, politicians working on TSCA reform must be prepared to compromise for the sake of producing a bill that stands a decent chance of being enacted. For even if the reforms do not go as far as some would like, they will surely be better than no reform at all.
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Bipartisan TSCA Reform Bill Set for Tuesday Markup
Apr 27, 2015 | PoliticoPro - Whiteboard
By Elana Schor
A compromise proposal to reform decades-old federal chemical safety laws is headed for a markup in the Senate Environment and Public Works Committee on Tuesday, setting the stage for some tension for Democrats between backers of the bill and liberals who decry it as too weak.
Among some Democrats’ biggest concerns with the Toxic Substances Control Act bill backed by Sens. David Vitter and Tom Udall is its preemption language, which could prevent states from enacting stronger chemical standards of their own while EPA pursues a potentially lengthy process of strengthening its federal regulations.
The committee’s ranking member, Sen. Barbara Boxer has proposed a stronger TSCA bill of her own alongside Sens. Bernie Sanders and Ed Markey. EPA has yet to weigh in formally on either Senate TSCA measure.
In addition to the TSCA bill, the environment committee is also scheduled Tuesday to mark up a bill from Sen. John Barrasso that would require EPA to publicly release scientific datathat underpins its regulations. -
Dem Preps Senate's Third Data Breach Bill
Apr 27, 2015 | The Hill - Cybersecurity
By Cory Bennett
The Senate this week could see yet another contender in the data breach legislative push.
Sen. Mark Warner (D-Va.) is getting ready to release his own version of a bill that would create a federal standard for how and when companies should notify their customers following a breach. The bill would also set minimum data security standards, according to Warner’s office.
Legislators have been looking for a solution to the current patchwork of state-level data breach notification laws, which businesses argue are difficult to navigate and create unnecessary expenses.
A slate of massive data breaches at Target, Home Depot, JPMorgan and Anthem, among many others, have also exposed “weak, ineffective, or conspicuously lacking data security requirements in the private sector,” said a Warner spokesperson.
Warner’s bill will join at least two other offerings that are indistinguishable in many ways.
Sens. Tom Carper (D-Del.) and Roy Blunt (R-Mo.) introduced two weeks ago their own bill and Sen. Bill Nelson (D-Fla.) has been pushing another offering since January. The White House even issued its own legislative proposal on the topic, which was largely mirrored in Nelson’s bill.
All would set data breach notification rules and some degree of nationwide data security requirements.
Warner’s bill might separate itself because the retail industry has indicated it will strongly back the measure. The Carper-Blunt bill received more praise from the financial industry, which argued the bill would hold retailers to standards already required in the financial sector.
On Capitol Hill, lawmakers have occasionally split along party lines over data breach legislation. Democrats fear a weak federal data security standard could replace existing strong state laws. Republicans worry an overly aggressive federal law could cause intrusive regulatory action.
The party divide caused a House data breach bill to not reach the floor last week during the lower chamber's "cyber week."
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(ACC Mentioned) US to Launch Blitz of Gas Exports, Eyes Global Energy Dominance
Apr 26, 2015 | Telegraph
By Ambrose Evans-Pritchard
The United States is poised to flood world markets with once-unthinkable quantities of liquefied natural gas as soon as this year, profoundly changing the geo-politics of global energy and posing a major threat to Russian gas dominance in Europe.
"We anticipate becoming big players, and I think we'll have a big impact," said the Ernest Moniz, the US Energy Secretary. "We're going to influence the whole global LNG market."
Mr Moniz said four LNG export terminals are under construction and the first wave of shipments may begin before the end of this year or in early 2016 at the latest.
“Certainly in this decade, there’s a good chance that we will be LNG exporters on the scale of Qatar, which is today’s largest LNG exporter,” he said, speaking on the margins of the IHS CERAWeek energy summit in Texas.
Qatar exports just over 100 billion cubic meters (BCM), though Australia is catching up fast as the offshore Gorgon field comes on stream. It may pull ahead of Qatar later this decade.
Mr Moniz said the surge in US output from shale fracking has already transformed the global market. "We would have been importing a lot of LNG by now. Those cargoes would have gone elsewhere and have in fact had a significant impact in the European market,” he said.
Gas frackers assembled at the world's "energy Davos" in Houston said exports could ultimately be much higher, potentially overtaking Russia as the world's biggest supplier of natural gas of all kinds.
"We're just fifteen years into a 150-year process," said Steve Mueller, head of Southwestern Energy, the fourth biggest producer of gas in the US .
The mile-deep Marcellus basin stretching from West Virginia through Pennsylvania to New York state is driving the explosive growth. Interlocking fractures in the rock make it possible for a single well with advanced technology to extract much more gas than thought possible just five years ago.
Once thought to be in decline, the Marcellus alone produces 113 BCM a year. This is roughly equivalent to Russia's exports to Europe through the Nord Stream, Yamal, and Brotherhood pipelines.
Mr Mueller defiantly sweeps aside those who claim that the US fracking industry is in serious trouble, insisting that drilling costs are coming down so fast that his company - and others - are staying a step ahead of falling prices.
"Rig efficiency was flat for thirty years but since then we've cut by five times. We have set in motion something that you can't deny and is irresistible," he said.
Mr Mueller said it had taken his company 17 days to drill a 2,600 ft well as recently as 2007. It has just drilled a 5,400 ft well in six days. "The new technology is amazing. We have a drill-bit with a chip inside that makes its own changes," he said.
He is continuing to invest heavily and hopes to boost output by up to 10pc annually for the next three years, despite a drop in gas prices to around $2.60 per million British thermal units (BTU). "If it stays around $3, we'll be fine," he said.
The US Energy Information Administration (EIA) expects gas prices to rise to $4.88 in real terms by 2020, and $7.85 by 2040.
What is remarkable is that US drillers can produce a third more natural gas today with 280 rigs than they did in 2009 with 1,200 rigs. Total shale output has soared to over 350 BCM from almost nothing a decade ago. It now makes up half of US gas production.
The Obama administration has so far been slow to approve new export terminals for LNG, partly because of concerns that the US would lose its massive advantage in energy and feedstock costs for industry.
Gas sells at for $7 in Europe, and over $10 in North-East Asia, four times more expensive. This cost-gap has been a key driver behind America's so-called "manufacturing renaissance", stoking an investment boom in chemicals, plastics, and glass, and saving the country's steel mills from slow death.
A corridor from Houston to New Orleans has attracted 33 petrochemical plants worth over $1bn each since 2011. The American Chemistry Council expects over $130 billion of industrial projects along this stretch by 2023.
The administration has concluded that the US lead is now so entrenched that there is little to lose from a partial levelling of the global playing field. The expense of freezing gas for liquefaction to minus 260 degrees Fahrenheit and shipping it across the Atlantic or Pacific in molybdenum-hulled vessels is enough to maintain a big cost advantage for US manufacturers.
Four LNG terminals with a combined export capacity of 70 BCM are likely to be approved soon by the Energy Department. The front-runner is Cherniere's $18bn terminal at Sabine Pass in Louisiana.
Experts are split over whether North America really can become the world's dominant LNG player. Moody's warned earlier this month that most of the 30 gas liquefaction projects planned in the US and Canada will never get off the ground, chiefly due to the linkage between LNG contracts and the price of crude. "The drop in international oil prices has wiped out the price advantage US LNG projects," it said.
Michael Smith, head of Freeport LNG, said his company will press ahead regardless with plans for a $13bn plant near Houston, and predicted that the US could soon leap-frog all rivals to become the new gas hegemon. "Our projects are very competitive and we will continue to have an advantage over the rest of the world," he said.
Russian president Vladimir Putin warned at the St Petersburg economic summit last year that US shale gas was abruptly changing the international order, with serious implications for his country. The early effects have forced down global LNG prices, creating a rival source of gas supply in Europe.
Any future American cargoes would further erode Gazprom's pricing power in Europe, and erode the Kremlin's political leverage. The EU already has a large network of import terminals for LNG.
Lithuania has just finished its "Independence" terminal, opening up the Baltic states to LNG. Poland's new terminal should be ready this year.
America's parallel drive for shale oil is equally breath-taking. Scott Sheffield, head of Pioneer Natural Resources, said his company has discovered huge reserves in the vast Permian Basin of West Texas.
"We think the Permian could produce 5-6m barrels a day (b/d) in the long-term," he said. It is a staggering claim. This would be more than Saudi Arabia's giant Ghawar field, the biggest in the world.
Ryan Lance, head of ConocoPhillips, said North American oil output could reach 15m b/d by 2020 and 25m b/d over the next quarter century, three times Saudi Arabia's current exports.
A vault forward on this scale would establish the US as the leading energy superpower in both oil and gas, a revival that almost nobody could have imagined seven years ago when the United States was in near panic over its exorbitant dependency of imported fuel. It would restore the US to its mid-20th Century position as a surplus trading nation, and perhaps ultimately as world's biggest external creditor once again.
Fracking is still an almost exclusive preserve of North America, and is likely to remain so into the early 2020s. China has large ambitions but the volumes are still tiny, and there is a shortage of water in key areas. Fracking remains mere talk in most other regions of the world.
Lukoil analysts say Russian extraction costs for shale are four times higher that those of US wildcat drillers. Sanctions currently prevent the Russians importing the know-how and technology to tap its vast Bazhenov basin at a viable cost.
John Hess, the founder of Hess Corporation, said it takes a unique confluence of circumstances to pull off a fracking revolution: landowner rights over sub-soil minerals, a pipeline infrastructure, the right taxes and regulations, and good rock. “We haven’t seen those stars align yet,” he said.
Above all it requires the acquiescence of the people. "It takes a thousand trucks going in and out to launch a (drilling) spud. Not every neighbourhood wants that," he said.
Certainly not in Sussex, Burgundy, or Bavaria.
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For U.S. LNG, is the Window Half Open or Half Closed?
Apr 27, 2015 | E&E - Energywire
By Jenny Mandel
After years of work behind the scenes, the United States has four liquefied natural gas export projects under construction, several more facing final investment decisions in the coming months and the first LNG cargo slated to ship from Cheniere Energy's Sabine Pass, La., terminal before year's end.
But despite that visible progress for the industry, there is growing concern that weak oil prices, disappointing world economic growth and a global gas glut have turned the economics of U.S. exports on their head.
For at least two years, industry stakeholders have been warning that the United States faced an unprecedented "window of opportunity" to jump into the LNG export game and claim a share of the market for U.S. producers before it became saturated and new contracts dried up.
Has that window for LNG export projects finally slammed shut?
"The drop in international oil prices relative to U.S. natural gas prices has wiped out the price advantage of U.S. LNG projects, reversing the wide differentials of the past four years that led Asian buyers to demand more Henry Hub-linked contracts for their LNG portfolios," warned Moody's Investors Service in a widely quoted assessment earlier this month.
That report essentially described the doomsday scenario for would-be exporters of U.S. natural gas, cautioning that the oil price plunge had stolen away the oil and gas majors' investment budgets just as the fundamentals for LNG shifted.
"Despite the hype over the past few years about gas-linked contracts, oil-linked contracts still dominate the industry, causing LNG revenues to fall for existing suppliers," Moody's said. "Lower oil prices are causing LNG suppliers to curtail their capital budgets. This will result in the cancellation of a majority of the almost 30 proposals in the U.S., 18 in western Canada and four in eastern Canada."
Part of the issue is how gas prices have shifted in the separate basins that make up the world LNG market.
Historically, Asian LNG prices have been indexed to oil prices while those in European markets have had a far weaker connection to crude. U.S. natural gas is priced based on supply and demand on the country's extensive gas grid, which has recently yielded prices significantly below Europe and Asia.
When crude prices dropped last year, Asian LNG prices followed, cutting into the arbitrage opportunity that has fueled interest in U.S. LNG exports.
As Jim Jensen, an independent consultant who has tracked LNG for years, explained in a recent presentation for the Center for Strategic and International Studies' Gas Market Study Group, the U.S. LNG industry is threatened by low oil prices in two ways.
First, there's the cut into the "Asia premium," the margin that Asian buyers pay over what product, shipping and other costs would imply based on the prices in the United States and Europe. He calculates that based on 2013 average natural gas costs, the Asia premium amounted to $7.88 per million British thermal units of gas -- effectively doubling Japan's LNG costs.
Jensen calculates that with the oil price plunge the premium has about disappeared. Today, he said, the cost to purchase natural gas in the United States, liquefy it and ship to Asia is about what it costs to buy the LNG in Japan -- eliminating the enticing arbitrage opportunity that has fueled U.S. LNG export interest.
But in addition to that, Jensen notes that low oil prices cut into the profitability of shale gas plays where the co-production of natural gas liquids is an important part of the financial equation, because the prices for such liquids are tied to crude. Since low domestic natural gas prices have generally pushed U.S. drillers toward these "wet" gas plays for the supplemental income, much of U.S. drilling is at risk.
"If the Saudis intend to send a message that they are no longer willing to support a price umbrella for costly competitive oil development, they have also allowed the rain to fall on the prospects for many current LNG project proposals," Jensen concluded. "Even if today's price levels are only temporary, they make a strong statement of the price risk for much of the LNG capacity being considered for Asian markets."
The Moody's analysts see the commodity price plunge as dividing the LNG industry in two.
"In new supply areas such as Australia and the U.S., the winners are the early movers that already have their liquefaction projects under construction, have ready access to developed sources of natural gas supply and are assured a new source of cash flow longer term," they wrote.
"On the other hand, many sponsors, including those in the U.S., Canada and Mozambique that have missed that window of opportunity as oil prices have declined, will face a harder time inking the final contracts, most likely resulting in a delay or a cancellation of their projects."Not an open-and-shut case
Many LNG industry stakeholders dispute Moody's bleak assessment, though.
Last week, Bob Franklin, Exxon Mobil Corp.'s president of gas and power marketing, gave a talk at the Johns Hopkins School of International Studies in which he said Washington, D.C., needs to get on board right away with regulatory reforms to ease the path for LNG projects but that the prospects remain good for some proposals to proceed.
Franklin took aim at an export review process conducted by the Department of Energy for businesses hoping to sell LNG to countries that lack free trade agreements with the United States, saying the drawn-out and unpredictable process at DOE threatens to stifle U.S. participation in the global industry, resulting in lost jobs and missed economic opportunities.
Exxon Mobil is partnering with Qatar Petroleum International on a proposal to add export capacity to the existing Golden Pass LNG import terminal, located down the road from Cheniere's Sabine Pass facility on the Louisiana-Texas border.
"The government's slow-walk policy [on non-free trade export permits] amounts to a de facto ban on LNG exports," Franklin told listeners. "Most applications, including ours, are languishing in approval purgatory" (EnergyWire, March 25, 2014).
As evidence that DOE should move quickly to approve all pending applications, Franklin pointed to a slew of studies by federal agencies, think tanks and corporate interests that concluded there would be limited or no harm from LNG exports, and significant benefits from liberalizing trade and increasing the country's geopolitical influence.
Even better than administrative action alone, he said, would be a legislative move to require fast LNG export decisions. The House passed such a measure in January, and Senate lawmakers have considered a similar measure that could advance within the next few months (EnergyWire, Jan. 29).
Franklin acknowledged that conditions are tough right now for new projects but said he does not see that as a deal-breaker and that, with the right regulatory change, the industry could continue to grow. "I would expect more projects to move forward," he said. "What I wouldn't be prepared to say is exactly which ones and how many."
Another stakeholder who sees growing room for new projects is David Montgomery, a former vice president with NERA Economic Consulting who has led several natural gas export analysis projects, including one under contract for the Energy Department that has helped to steer national policy on the issue.
In an interview, Montgomery said the "window of opportunity" concept stems from two ideas, one meaningful and one illusory.
The deceptive part of that window is the vision of a vast arbitrage opportunity between sky-high Asian prices and dirt-low U.S. gas rates, Montgomery said. The reality is that full-blown economic models like the one NERA relies on show that price gap quickly shrinking away as new supplies enter the market -- as has taken place over the past year.
"It doesn't really change the fundamental amount of LNG trade that was going to happen" to see that dramatic price difference disappear, he said, "but it dampens the enthusiasm."
But the other element of a "window" of time for the industry that is real, Montgomery said, is the significant first mover advantage available to the first few companies with product to sell.
Due to the extraordinary capital expense of a liquefaction plant and the financial incentives that creates, "Whoever gets in there first is basically in a position to scare off competitors," Montgomery said. By his analysis, the projected demand for LNG imports is not currently accounted for with export facilities so that first mover advantage is still there for the taking.
But if the United States has a process that runs two or three years longer than that of competitors like Canada, Australia or Qatar, he said, that will limit developers' ability to sit at the table.Henry Hub exposure
David Goldwyn, former State Department coordinator for international energy affairs and president of Goldwyn Global Strategies, agrees that the U.S. industry has succeeded in positioning itself well in the first wave of projects.
"Two years ago we were looking at rising demand for LNG and lots of different countries who had projects, and the argument was that if we didn't move then we'd lose the opportunity to get contracts from 2018 forward," Goldwyn said. "I think you look back and with the projects that were approved ... they were nearly all subscribed."
Now, he said, shifting conditions mean the market has entered a new phase.
"Will there be more contracts? Are there opportunities left?" he asked. A ranking of proposals from all around the world shows that greenfield projects that aim to build liquefaction from scratch are generally the most expensive, while building onto existing facilities like many U.S. developers are proposing is significantly cheaper.
Another consideration for buyers is the price and reliability of the proposed gas supply, and there Goldwyn sees a big U.S. advantage in low production costs and the seemingly endless supply of shale.
"New projects [around the world] will have to offer some exposure to Henry Hub pricing," Goldwyn said. Despite the fact that an oil linkage is currently helping Asian buyers, he said he expects that tie-in to continue to erode as sellers are pressed for better contract terms. "I think they're going to have to offer either a better formula [for oil linkage], or something akin to Henry Hub pricing."
"There's an argument to be made that there's another window of opportunity opening, and U.S.-based projects, if they're able to get online quickly, may be more competitive because of the pricing they're able to offer and ... the reliability of the gas," he said.Better risk
Looking at LNG sales from the buyer's perspective, another consideration quickly comes into focus.
Hidehiro Muramatsu, general manager of the Washington, D.C., office of the Japan Oil, Gas and Metals National Corp. (JOGMEC), said the key interest for Japanese energy traders and utilities in purchasing U.S. LNG lies in diversifying their energy portfolios.
"Diversification means not only the price differential but also the gas supply source," Muramatsu said in a March email.
Today, 80 percent of the country's LNG supply passes through the Strait of Hormuz between Iran and Oman, largely from Qatar, the world's largest supplier. Shipping U.S. Gulf Coast cargoes to Tokyo avoids that chronically sensitive region and shifts the most restricted portion of the route to a passage through the Panama Canal, a transit that is currently in the midst of a major widening project that will allow it to accommodate modern LNG tankers.
With several contracts in place for Japanese firms to buy Gulf Coast LNG, Muramatsu said some Japanese companies are looking to expand their options still further.
"The shrinking price differential makes some LNG projects on the West Coast less attractive than before," Muramatsu said. "Some Japanese companies are, however, still looking for the possibility and opportunity to export LNG from the West Coast of the U.S. and Canada."
James Jensen, the consultant who notes the oil price risk to U.S. wet gas production plays, pointed to a different motivator for buyers pursuing U.S. contracts. A key element of the appeal, he said, is the redefining of traditional LNG contract terms that shift risk and reward from the seller to the buyer.
All of the U.S. export contracts so far, he noted, are unusual in that the pricing is tied to the origin, rather than the destination, of the sale. They also differ from traditional contracts in giving the buyer title at the point of purchase, rather than upon delivery at one particular port, so buyers can resell cargoes if they so choose.
As he sees it, just holding contracts like those give buyers more leverage in negotiating flexibility with other sellers down the line.
Jensen said 60 percent of the contracts written so far for U.S. Gulf Coast supplies have gone to portfolio buyers "whose profit depends on the ability to buy at North American commodity prices and resell at international prices; these projects are clearly at risk."
But he added, "For destination market buyers, such as Japan or Korea, the diversified U.S. contract structure is a plus in future contract negotiations, even if the pricing advantage of U.S. gas disappears."
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Fla. Senate Advances Bill to Shield Fracking Chemicals
Apr 27, 2015 | E&E - Energywire
A divided Florida Senate passed a bill that would enable oil and gas companies to shield chemicals used in hydraulic fracturing, which builds on a slew of pending legislation designed to regulate the production method.
Environmental groups have heavily critiqued the bills and warned that the proposed rules are narrowly written and exclude chemical fracking, which uses chemicals to dissolve rock.
"These bills are nothing more than 'Trojan Horse' legislation that will pacify the public, while forbidding local residents to decide whether or not they want fracking in their community," said Kim Ross of advocacy group ReThink Energy Florida.
Opponents of S.B. 1582 said it also violates public records laws by giving the energy industry a shield that no other industry group has.
"Can you justify for me why they should have special treatment in light of the fact we may be building a road map for any other company ... to do an end-run around the public records law?" said Senate Appropriations Chairman Tom Lee (R) who voted against the bill.
But supporters of the bill, including Paula Cobb, deputy secretary for the Department of Environmental Protection, said it places the burden on the information owners who must go before a court to request their information be hidden, instead of the public (Mary Ellen Klas, Miami Herald, April 23). -- KS
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Letter: Dangers of Drilling in Earthquake-Prone Areas
Apr 27, 2015 | The New York Times
By Shaye Wolf
Oklahoma is hardly the only state on shaky ground because of underground injection of hydraulic fracturing flowback and other oil waste (“Oklahoma Recognizes Role of Drilling in Earthquakes,” news article, April 22).
Here in California, an analysis by my organization and two other nonprofit groups found that a majority of active oil industry wastewater disposal wells are near active faults.
Oil companies dump billions of gallons of waste fluid a year into disposal wells close to earthquake faults around Los Angeles and other major California cities. At least 87 oil industry disposal wells are within one mile of a recently active fault, and there are even hundreds of disposal wells near the San Andreas Fault.
Yet Gov. Jerry Brown backs fracking and other oil production techniques that produce vast volumes of wastewater. Fracking is now used for half of all new California oil and gas wells, according to theCalifornia Council on Science and Technology.
That’s an unacceptable risk in our already earthquake-prone state.
SHAYE WOLF
Climate Science Director
Center for Biological Diversity
San Francisco
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Okla. Scientists Suspected Quakes Linked to Oil 8 Years Ago
Apr 27, 2015 | E&E - Energywire
By Mike Soraghan
This story was updated at 11:54 a.m. EDT.
The Oklahoma Geological Survey jolted the national drilling debate last week when it announced oil and gas activity was "very likely" causing the earthquakes plaguing the state.
But many scientists at the survey had suspected as much since 2007, when earthquakes rattled an area near an oil and gas operation in southeast Oklahoma City.
Survey leaders, though, decided against going public with a theory that might be viewed as hostile to the state's most prominent industry, according to interviews and agency emails obtained by EnergyWire under Oklahoma's Open Records Act.
Instead, the agency, commonly called by its initials, OGS, accepted thousands of dollars' worth of seismic equipment from the company that scientists suspected of causing the quakes, Tulsa-based New Dominion LLC. And for years, they told the public the quakes were natural.
"The survey is currently dismissing such events as being naturally-occurring," OGS geologist Richard Andrews, now the interim director, wrote in an email to a family member last year. "Sooner or later, the media will pick up on the real cause and create a genuine ruckus."
The first OGS geologist to raise concerns about New Dominion's wells was Dan Boyd, who now works in the oil and gas industry in Qatar. Boyd said he urged survey Director Randy Keller and state seismologist Austin Holland to acknowledge the link.
"The petroleum guys, myself included, thought it was an open-and-shut case," Boyd said. "I voiced my opinion numerous times in numerous meetings."
But he said he understands that going public would have been tough in a state as oil-dependent as Oklahoma.
"You're talking about the major job creator, income generator for the state," he said. "Everyone is very concerned that they don't want anything that would derail that."
Industry has exerted influence on the debate. When the survey edged closer to linking quakes and oil operations in 2013, Holland, a University of Oklahoma (OU) employee, was summoned to a meeting with university President David Boren and Harold Hamm, the influential founder of Continental Resources Inc. (EnergyWire, March 3). Boren and Hamm have said the meeting was purely informational.
Holland has said he had the academic freedom he needed. And he's critical of Boyd's assertion that the cause of the quakes was clear in 2007.
"Dan Boyd clearly has some strong beliefs on the matter," Holland said in an interview earlier this month. "He can believe all he wants, but until he contributes in the scientific discussion, it's not helpful."
New Dominion has publicly rejected the idea that it caused any earthquakes. Jean Antonides, the company's vice president for exploration, said Friday that the company has explained the workings of its disposal wells with state regulators at the Oklahoma Corporation Commission.
"Data demonstrating what really happens in the Arbuckle system in Oklahoma City field was presented to them," Antonides said.
Commission officials say they are looking at the New Dominion wells and, after reviewing data submitted by the company, have directed it to reduce volume by 50 percent and submit additional data.
Oklahoma had 585 earthquakes last year of magnitude 3.0 or greater, up from an average of one to three before 2009. That's three times more than California had. Oklahoma could be on track for more than 800 quakes this year -- which means there's a higher risk of a quake that could knock down buildings and injure large numbers of people.
Oklahoma's political leaders have been slow to investigate why the state has been shaking so much. Until last week, they had mostly left it to the scientists at OGS.
Holland has said that OGS scientists had suspicions about a link to oil and gas since 2010.
"But until we can demonstrate that scientifically or not we were not going to discuss that publicly," Holland wrote to a fellow scientist in 2013.
Holland started at the survey in 2010. The suspicions go back years further than that.'He wanted to be nice to us'
One day in February 2007, the earth shook around Tinker Air Force Base in southeast Oklahoma City. These days, many Oklahomans would probably shrug and move on.
But the shaking was accompanied by a huge "bang," Boyd recalled. And at the time, he said, people around the base were scared.
"People thought it was a terror attack on Tinker Air Force Base," he said. Soon enough, though, authorities reported it was a magnitude-3.0 earthquake.
About 3 miles from the center of that quake was a New Dominion oil and gas wastewater injection well with a smirk-inducing name: Deep Throat.
Beyond the name, Deep Throat had caught Boyd's attention for the size of its operations. Deep Throat had started pumping in 2004, at more than 12,000 barrels a day (more than half a million gallons). That, said Boyd, was a big well.
By November 2006, that amount had risen sevenfold, to more than 92,000 barrels a day. The first earthquake came the next month, on Dec. 21, 2006.
New Dominion's operations in the area had nothing to do with hydraulic fracturing, or "fracking." In some ways, they were the opposite. While fracking involves injecting water downhole at high pressure, New Dominion perfected a production method called "de-watering."
The company was pumping millions of gallons of oil-laced water out of a spent oil field under Oklahoma City. It separated the oil, then pumped the water into wells like Deep Throat. Company founder and President David Chernicky has called the disposal system "essential" to the company's success (EnergyWire, July 14, 2014).
More quakes came in February 2007. Deep Throat wasn't injecting as much at that point. But a sister well, called Sweetheart, had come online. Together, they were injecting more than 100,000 barrels a day.
"The fluid volumes are astronomical," Boyd said. "That's more than a Saudi Arabian flow rate."
Andrews, the current interim director, has also linked "de-watering" with earthquakes going back many years.
"The bottom line is that since this practice started several years ago, earthquakes suddenly became common," Andrews wrote in an email to an Oklahoma television reporter last year.
Boyd called New Dominion three days after the February 2007 quake, according to notes he kept and emailed to colleagues last year. That led to a March 28, 2007, meeting at the survey's earthquake observatory outside of Tulsa. Boyd, then-Director Charles Mankin (who has since died) and other OGS scientists met with Chernicky, New Dominion's charismatic founder.
"He came in in a golf shirt and shorts, a John Boehner tan, and he brought three or four phones," Boyd said. "He would stop the meeting to get on the phone; he must've done that 15 times."
There was no confrontation or accusation about New Dominion causing earthquakes. But the survey came out of the meeting with an agreement that the company would buy a handful of new seismic stations, installed with all expenses paid.
"It was never spoken as to whether there was a 1-to-1 correlation," Boyd said. "Let's just say he wanted to be nice to us."
After that, the earthquakes died down. In 2009, a "swarm" of earthquakes began near Jones, Okla., about 20 miles northeast of the Tinker quakes. A study last year led by Cornell University tied the "Jones Swarm" quakes to Deep Throat and three other New Dominion wells (EnergyWire, May 2, 2014).'I have to be careful'
New Dominion also has a well near the epicenter of Oklahoma's largest recorded earthquake, a magnitude-5.7 event in November 2011 (EnergyWire, July 24, 2012). Centered east of Oklahoma City near Prague, Okla., the quake damaged hundreds of buildings, destroyed 14 homes and injured two people.
Seismologists quickly questioned whether the quakes were natural or related to the oil production boom in Oklahoma. In an email to a colleague obtained by EnergyWire, Boyd recalled that he pressed his point in a Dec. 16, 2011, OGS staff meeting. Holland and Keller, he wrote, "kept up the 'natural phenomenon' story" and looked at him "like I was crazy."
Amid that suspicion, then-OGS Director Randy Keller found it awkward to contact New Dominion, the major operator around Prague.
"In regard to New Dominion, I have to be careful in contacting them," Keller wrote to U.S. Geological Survey geophysicist Art McGarr. "They have been very open with us about the wells between Norman and Oklahoma City (they even gave us money to buy seismic systems to install around their wells). However, this was before my time at OU, so I need to do a little more homework before contacting them."
OU professor Katie Keranen wrote a peer-reviewed paper in 2013 linking the quake to a pair of injection wells in the area, but not New Dominon's. OGS issued a statement rejecting her findings. Keranen left for a professorship at Cornell shortly thereafter. McGarr did a study pointing the blame at the New Dominion well.
New Dominion is being sued by people who were injured or had their homes damaged in the 2011 Prague quake. New Dominion's attorney has argued that making oil companies liable for earthquakes could damage the industry.
Chernicky dismisses the idea that his wells are causing earthquakes, or that human activity can even trigger them at all. If that's the case, he told Bloomberg Businessweek for a profile that ran last week, then people "can probably fart and shift the orbit of the planet, too."
Colorful as it is, the statement is at odds with the thinking of seismologists, who say that a range of human activities can trigger earthquakes. Those activities include dam-building and production of geothermal energy.'Perfect laboratory'
Since the Prague quake, the earthquake swarms have grown and reached into new areas. Much of the shaking is now taking place along the Oklahoma-Kansas border in a play called the Mississippi Lime (EnergyWire, Feb. 9). New Dominion does not operate there. Oklahoma City-based SandRidge Energy Inc. is the major operator.
OGS has wavered since the Prague quake between accepting some connection between Oklahoma's earthquakes and oil and gas drilling, and rejecting the research of outside seismologists who linked specific quakes to specific wells (EnergyWire, April 20).
But with its statement last week, the survey dismissed the idea that the surge in shaking is naturally occurring (EnergyWire, April 22).
The earthquakes, though, are still happening -- 26 in the past week alone.
The regulators at the Corporation Commission are currently working to determine which disposal wells might have been drilled too deep in earthquake zones. Gov. Mary Fallin (R) has directed $50,000 to the earthquake effort and last week established a state earthquake website (EnergyWire, April 22).
No bills on earthquakes were introduced in the state Legislature this year, but lawmakers are moving to block cities from regulating drilling.
OGS, which tries to analyze every quake for location and magnitude, is having trouble keeping up.
Boyd said he used to needle Holland, telling him the earthquakes offered "the perfect laboratory" for seismic experiments.
"You've got an industry that's generating all these earthquakes," Boyd recalled telling Holland. "You're going to be able to figure out what makes the sub-surface of the earth work. Because there's no other state in the world that would let you continue."
Click here to view the emails.
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Lawsuit Pushes EPA to Decision on Toxic Emissions Disclosure
Apr 27, 2015 | E&E - Energywire
By Ellen M. Gilmer
U.S. EPA last week signaled plans to decide on the contentious question of whether oil and gas drillers should be required to make disclosures on a federal pollution database.
The Environmental Integrity Project (EIP) and several other groups sued EPA in January, alleging that the agency ignored environmentalists' 2012 petition requesting that the oil and gas extraction industry be subject to the requirements of the Emergency Planning and Community Right-to-Know Act (EnergyWire, Jan. 8).
The 1986 law created the Toxics Release Inventory, an annual catalog of emissions from industrial sites. EPA decides what types of facilities must report to the database, and oil and gas well pads, storage tanks and compressor stations have never been included.
Now, EPA says it will make a decision by Oct. 30 on the environmentalists' petition. Lawyers for EPA and EIP on Friday asked the U.S. District Court for the District of Columbia to halt proceedings in EIP's lawsuit until then.
"Over the past month and a half, the parties have engaged in regular discussions to determine whether the issues in this case can be resolved without further litigation," the joint motion said. "Staying this matter pending EPA's anticipated action on Plaintiffs' petition would conserve the resources of the parties and the Court by avoiding potentially needless litigation."
Adam Kron, an EIP attorney representing the environmental groups in the lawsuit, said the new timeline for a decision is "a step in the right direction," but noted that the groups will continue the litigation if EPA punts on the issue.
"We're hopeful that EPA will make the right decision and finally require the industry to report to the Toxics Release Inventory," he told EnergyWire.
EPA declined to comment.
Reporting to the Toxics Release Inventory has long been an agenda item for several environmental groups concerned that drilling and, particularly, hydraulic fracturing are not adequately regulated by the federal government.
A 2011 congressional report found that the industry routinely uses at least 45 chemicals that would have to be disclosed if the industry were subject to the EPCRA requirements.
"Toxic chemicals don't cease to be toxic when the oil and gas extraction industry uses them," Mark Szybist, attorney for plaintiff PennFuture, said in a statement when the lawsuit was filed.
In 1996, EPA conducted a rulemaking that considered including drillers in the requirements, but the agency never reached a decision on the issue.
Industry representatives have maintained that the Toxics Release Inventory is not designed to include disclosures from industries that handle toxic chemicals on only a temporary basis.
"The fact is, exploration and production activities are generally located across a large region on a non-permanent basis," wrote Energy In Depth's Randy Hildreth after the suit was filed. "Their operations greatly differ from the typical operations of chemical manufacturers and other industrial processes that were specifically included in the act."
Word of a potential settlement between EPA and environmentalists first came last month, when the agency and environmental groups noted in legal filings that they were negotiating their options. Neither side has disclosed any details about potential settlement terms (EnergyWire, March 10).
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States Press Argument that Comment Period on EPA Rule is 'A Sham'
Apr 27, 2015 | E&E - Greenwire
By Jeremy P. Jacobs
More than a dozen states Friday said recent remarks from U.S. EPA Administrator Gina McCarthy show the agency has already made up its mind about its proposed greenhouse gas standards for existing power plants and reiterated their call for a federal court to block EPA from promulgating the rules.
The states, led by West Virginia, are asking the U.S. Court of Appeals for the District of Columbia Circuit to issue an "extraordinary writ" prohibiting EPA from finalizing the rules this summer.
At oral arguments earlier this month, a three-judge panel was skeptical of the arguments made by states and the coal industry. In particular, the panel seemed reluctant to rule against EPA before it has had the opportunity to finalize its rule and justify its reasoning.
But at least two of the judges did express concern about whether EPA has already settled on the legal foundation of the rule -- its interpretation of the relevant section of the Clean Air Act, 111(d).
Judge Thomas Griffith, for example, asked whether the agency was turning the ongoing public comment period into a "sham." And Judge Karen Henderson questioned whether EPA has a "closed mind" on the issue (Greenwire, April 16).
In a letter to the D.C. Circuit, the state attorneys general sought to play on those concerns.
They highlighted McCarthy's remark last Thursday on Twitter that the agency is "committed to reducing carbon pollution" with the Clean Power Plan, which would cut heat-trapping emissions by 30 percent from 2005 levels by 2030 and dramatically shift the country away from coal-based electricity.
Additionally, the states pointed to a video in which McCarthy said the regulations are on track to be finalized this summer, as well as a Greenwire article in which an EPA official discusses a "pretty slick" TurboTax-like program for states to submit their implementation plans (Greenwire, April 23).
"McCarthy's unprecedented and audacious behavior," the states wrote, "lays bare EPA's goal: to ensure that States sink unrecoverable resources into preparing State Plans, while delaying judicial review for as long as possible under the cover of a sham comment period."
EPA supporters point out that there is little that is unusual about McCarthy's remarks -- officials regularly comment on regulatory goals. And McCarthy did not make any specific remarks about the legal justification of the regulations.
Click here for the letter.
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Nuclear Industry Pushing for Changes to Obama’s Climate Rule
Apr 27, 2015 | The Hill - E2 Wire
By Devin Henry
As the Obama administration moves to finalize its climate rule for power plants this summer, the nuclear industry is pushing for major changes to the components of the plan.
The proposed Clean Power Plan rule would allow states with nuclear power plants to take 6 percent of their nuclear output and credit it toward the emissions reduction goals regulators set for them. The industry says the 6 percent figure is arbitrary and creates a disincentive for states that might otherwise switch to nuclear sooner.The preliminary emissions reduction targets for some states also assume power is being generated today by nuclear plants that are still under construction, something the industry has argued contorts states’ existing emissions and makes it much tougher for them to bring down their carbon intensity in the future.
“The community doesn’t necessarily want preferential treatment, we just want equal treatment,” said Craig Piercy, the Washington representative of the American Nuclear Society.
Environmental Protection Agency (EPA) Administrator Gina McCarthy acknowledged at a House hearing in February that “on the basis of the comments that came in,” the agency would “take a very close look” at its use of nuclear energy in the plan.
Final rules are due later this year, so an EPA spokeswoman couldn’t say much, except that “nuclear power is part of an all-of-the-above, diverse energy mix and provides reliable baseload power without contributing to carbon pollution. Nuclear power from current and future plants can help the U.S. meet its goals.”
Nuclear power is a zero-emission, high-output power source, and one of several “renewable or low-emission” options the administration says states can use to help meet the emissions reduction goals it will set in the final regulation. The overall goal of the plan is a 30 percent reduction in carbon emissions from U.S. power plants by 2030, and states have varying targets based on their current energy portfolios.
States can use 6 percent of their nuclear generation as credit toward their goals. That number is based on a government calculation that nearly 6 percent of U.S. nuclear plants are in danger of closing, primarily due to market pressures. The credit is meant to encourage states to keep those plants open, or replace nuclear output with other forms of clean energy.
“That was an attempt ... to indicate that we are building those into the standard-setting process because we believe that they may be at risk,” McCarthy said in February. “But they should be staying in, all things being equal, because we are providing an incentive for a low-carbon future with this rule.”
The nuclear industry said the 6 percent plan could end up reversing climate gains, however: if a nuclear plant were to close, and a state only needed to replace 6 percent of its output with clean energy, the rest could come from higher-emission sources and the state would still be seen as achieving the goal.
The industry’s other major concern is related to the way the plan treats future nuclear plants. In states currently building new plants — Georgia, Tennessee and South Carolina — preliminary reduction targets are higher because the power from those nuclear plants is already assumed to be on the books.
Utilities companies have opposed the move. Jack Bonnikson, a spokesman for Georgia-based utility Southern Co., said the rule “penalizes these states for taking early action and leading in the expansion of new, carbon-free nuclear energy for America.
“If in the final rule EPA insists on setting binding statewide emission rate goals, then we believe under-construction nuclear units should be excluded from the calculation, with the full output available for compliance,” he said in a statement.
Pro-nuclear lawmakers have encouraged the EPA to look more closely at nuclear energy. At the February hearing, both Republicans and Democrats from Illinois pressed McCarthy to reconsider the plan’s strategy. Illinois has 11 nuclear reactors, the most in the nation.
“If the goal of the Clean Power Plan is to reduce carbon emissions while also ensuring that states can continue to provide reasonably-priced, safe, reliable electricity to its consumers, then nuclear power must play a central role in helping to achieve this objective,” Rep. Bobby Rush (D-Ill.) said.
Industry and lawmakers have different expectations for how the EPA’s review of the nuclear rules will shake out. Piercy said “it’s hard to imagine a scenario” where the EPA would finalize a rule with the nuclear concerns still on the books. But Rep. Adam Kinzinger (R-Ill.) said he worries McCarthy’s comments amount to “Washington-speak for ‘we’re not going to do anything.’ ”
McCarthy has said she is committed to incorporating nuclear into the final climate rule.“I will certainly agree that nuclear power is zero-carbon,” she said earlier this year, “and it is an important part of the baseload for many of the states, and it should be considered by those states carefully in the development of their plans.”
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Okla. Response to Clean Power Plan Gains Traction
Apr 27, 2015 | E&E - Energywire
Oklahoma's attorney general would be able to sign off on the legality of any state plan dealing with federal carbon emissions regulations for power plants according to a state Senate bill passing through the Legislature.
The state's Attorney General Scott Pruitt (R) pushed S.B. 676 as a way to help Oklahoma navigate future legal battles over U.S. EPA's proposed Clean Power Plan, set to be finalized this summer.
The bill's primary House sponsor, state Rep. Jon Echols (R), warned his colleagues that voting against S.B. 676 would endorse EPA's proposed rules, which he described as an overreach of a "rogue agency."
"This vote will decide where you stand on EPA overreach," Echols said.
Under the proposed CPP, the state's Department of Environmental Quality and staff at the Commission Corporation will draw up a plan designed to comply with the regulations. Under S.B. 676, Pruitt would ensure the state plan follows state and federal laws before Gov. Mary Fallin (R) signs off on it.
When asked why the state needs this extra step, Pruitt said his action will make sure decisions about Oklahoma's power generation are made by state officials, not federal.
"The EPA's so-called 'Clean Power Plan' is the federal government placing the proverbial 'gun to the head' of the state of Oklahoma to make the state bow to the pressure of an unlawful EPA rule," Pruitt said. "Senate Bill 676 is a bulwark against the overreach of the EPA. This is an important step to the state of Oklahoma's ability to defend its interests against the unlawful actions of the EPA" (Paul Monies, Oklahoman, April 24). -- KS
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Energy Spending on the House Floor
Apr 27, 2015 | PoliticoPro (Morning Energy)
By Darius Dixon
ENERGY AND WATER (HALF) WEEK: The House doesn’t gavel back into session until tomorrow but the chamber is poised to take its $35.4 billion fiscal 2016 energy and water spending bill to the floor this week. So rest up now. The House Rules Committee intends to take up both the energy and water measure as well as the 2016 military construction and veterans affairs spending bill at 5 p.m. tomorrow. And as you appropriations wonks know, the tradition for these bills is to do some sort of open rule, which lifts the floodgates for lawmakers to submit all sorts of amendments — and leads to some late-night votes. If both spending bills make it to the floor this week, as expected, that pretty much fills the schedule for Wednesday, Thursday and Friday. Still, House leadership is also hoping they can get to the 2016 budget resolution conference report and Rep. Bill Shuster’s bill to have the draft Waters of the U.S. rule pulled, H.R. 1732.
An inspiration for getting things in order: The House is not in session next week (The Senate, however, will be around).
For the record, while ME could certainly find other ways to spend an evening, amendment debate on appropriations bills can get pretty interesting: Pros will recall one of the more interesting debates dating back to 2013, when Rep. Marsha Blackburn gave an impassioned defense of ceiling fans — and why lawmakers should defund the Energy Department’s work to boost their efficiency. “It is a sad state of affairs when even our ceiling fans aren’t safe from this administration,” she said at the time: http://politico.pro/16r3QbM
CLIMATE CHANGE IS ON THE MENU, MR. PRIME MINISTER: The Obamas are hosting Japanese Prime Minister Shinzo Abe and his wife for an official visit this week in Washington. The two leaders will meet tomorrow, commemorate the nearly 70 years since the end of World War II, and discuss several issues, including climate change, the Trans Pacific Partnership, and Iran’s nuclear activities. “Just a word on climate...As he always does, we would expect President Obama to raise this important global issue, which is very high on his agenda, with Prime Minister Abe,” Caroline Atkinson, White House deputy national security advisor for international economics, said on a call previewing Abe’s visit, according to a transcript. “We work and have worked very closely with Japan in climate negotiations ... So this visit will provide an opportunity for the two leaders to further their cooperation, and to help build momentum towards a successful and ambitious climate agreement in Paris in December.”
HAPPY MONDAY! I’m Darius Dixon, your morning host, and as far as I know, no one has said that my reign at Morning Energy would bring about the End of Days. But alas, the day is young. Send your energy news, tips and commentary toddixon@politico.com, and follow us on Twitter @dariusss, @Morning_Energyand @POLITICOPro.
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CLIMATE RULES? BUCKET! President Barack Obama made a few plugs for climate change and EPA’s greenhouse gas rules during his White House Correspondents’ Dinner standup routine on Saturday. “After the midterm elections, my advisors asked me, “Mr. President, do you have a bucket list?” And I said, “Well, I have something that rhymes with bucket list,’” Obama told the crowd. “Take executive action on immigration? Bucket. New climate regulations? Bucket. It’s the right thing to do.”
After dinging former Vice President Dick Cheney, ex-Rep. Michele Bachmann, as well as CNN and MSNBC, Obama peppered jokes onto most of the GOP presidential field. But the president seemed to take special interest in Sen. Ted Cruz’s position on climate change and the Texas Republican’s comments last month comparing himself to one of the greatest astronomers of all time: “Ted Cruz said that denying the existence of climate change made him like Galileo. Now that’s not really an apt comparison,” Obama said. “Galileo believed the Earth revolves around the sun. Ted Cruz believes the Earth revolves around Ted Cruz. And just as an aside, I want to point out, when a guy who has his face on a ‘Hope’ poster calls you self-centered, you know you’ve got a problem.”
But Obama saved his longest riff on climate change (about 17 minutes in) for his tag team performance with “Luther, the anger translator,” aka Keegan-Michael Key from Comedy Central’s “Key and Peele,” where Obama gets riled up about “elected officials throwing snowballs in the Senate.” What did Senate Environment and Public Works Chairman Jim Inhofe prove again by tossing a snowball in the Senate?
Obama’s full routine (video): http://politi.co/1z3mtAJ
Before I get a dozen emails questioning whether 2014 was really the warmest year on record because NASA is only 38 percent sure (NOAA is 48 percent sure, by the way), it seems worth clearing one thing up about that number. The 38 percent figure isn’t relative to every year in the record. While NASA asserts that 2014 has a 38 percent chance of being the warmest on record, that’s mainly compared to 2010, which has a 23 percent chance of being the “winner,” 2005 (17 percent) and 1998 (4 percent). Factcheck.org explained this in more detail: http://bit.ly/1GwhcSl
SWEET CHILD O’ MONIZ: Pro Energy’s Darren Goode was in Houston for CERAWeek and walked away with one distinct impression of Energy Secretary Ernest Moniz: He’s the “good cop” of Obama administration for the energy industry. Darren: “Moniz is a genuinely popular figure with some of the president’s harshest critics in Congress and industry. In the button-down world of oil, gas and power CEOs, he’s a celebrity whose status has only gained luster thanks to his crucial role in the U.S. nuclear talks with Iran. ‘More than one person has referred to Ernie as a rock star,” said Daniel Yergin, a Pulitzer-winning oil historian who serves as ringleader of the annual CERAWeek conference. ‘He’s not only an energy secretary with a Ph.D. in theoretical physics. He’s also an energy secretary with a lot of charisma.’” Hess Corp. CEO John Hess: “He’s one of the most knowledgeable, capable energy secretaries we’ve ever had.” Darren Goode has more for Pros: http://politico.pro/1b4YB4y
EPA FOES HOPE McCARTHY COMMENTS WILL WRECK CARBON RULE: Memo to Gina McCarthy: Ix-nay on the onfidence-cay. Foes of EPA’s carbon rule for power plants are seizing on the EPA chief’s latest comments vowing to issue a final rule this summer as proof that EPA has made up its mind about the regulation’s legal foundation — an issue that clearly riled at least two of the judges who heard arguments in this case earlier this month. In a letter to the D.C. Circuit Court of Appeals Friday afternoon, attorneys general from the states challenging the proposed rule pointed out that in the week since oral arguments, McCarthy has made further public statements “that confirm EPA has already determined conclusively that it has authority to issue a rule under Section 111(d).” They specifically cite a tweet in which she says she is "committed to reducing carbon pollution," as well as an interview with the Huffington Post in which she said, "We are quite certain that these obligations will be required.”
This was one issue that clearly irked the judges during oral arguments on April 16, when they otherwise seemed hesitant to get involved in a rulemaking before a final rule is issued. Judge Thomas Griffith said that McCarthy’s past statements “do not help the government's argument at all” and questioned whether EPA’s call for comments is a “sham,” while Judge Karen LeCraft Henderson said EPA appears to have a “closed mind.” McCarthy’s statements aren’t really anything out of the ordinary — this is Obama’s marquee climate rule, and agency heads routinely speak about forthcoming regulations as if they are inevitable. And administration attorneys assured the judges that interpreting McCarthy’s comments as a fixed legal rationale is “overreading.” But the AGs are hoping her “unprecedented and audacious behavior” will perturb the judges enough for them to torpedo the rule before it even gets off the ground. Their letter: http://politico.pro/1aZbIUX
FERC WAIT AT SCOTUS GOES ON: Dashing the hopes of legions of FERC-watchers, the Supreme Court did not say this morning whether it will hear the agency’s appeal of a lower court decision striking down the commission’s 2011 demand response rule. The justices had been scheduled to discuss the case at their conference last Friday, but they did not include the appeal on their list of orders this morning. That means the case will probably be discussed again at this Friday's conference, with a decision being announced as early as May 4.
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Week ahead: Moniz Takes Energy Infrastructure Pitch to Congress
Apr 27, 2015 | The Hill - E2 Wire
By Devin Henry
Energy Secretary Ernest Moniz is making a pitch for the Obama administration’s energy infrastructure plans on Capitol Hill.
Moniz will testify before the Senate Energy and Natural Resources Committee on Tuesday on the Quadrennial Energy Review, a report from the administration that calls for billions of dollars in federal investment in energy infrastructure.
The report, released Tuesday, recommends an overhaul of the nation’s pipelines, electric transmission lines, energy storage capacity and other infrastructure. The Obama administration also plugged the plan as an economic engine in the future.
Moniz traveled with Vice President Biden to Philadelphia to discuss the plan. He'll face a tougher challenge taking his case to the Capitol and before Republican Sen. Lisa Murkowski’s Energy Committee.
Besides hearing from Moniz, the Senate Energy panel has a busy week. On Thursday, it holds a hearing on various energy bills introduced in the Senate this year. That same day, the public lands, forests and mining subcommittee will hear testimony on the Bureau of Land Management’s hydraulic fracturing rule.
The Senate Environment and Public Works Committee will mark up six bills and various resolutions on Tuesday. It will also consider Mark Scarano’s nomination as federal co-chair of the Northern Border Regional Commission.
The Senate Commerce, Science and Transportation Committee will hold a hearing on the response to the Deepwater Horizon explosion and oil spill on Wednesday.
In the House, the Energy and Commerce Committee will continue its work on a comprehensive energy bill. On Wednesday, it will consider changes to the Strategic Petroleum Reserve and new energy efficiency standards.
Elsewhere, the House Natural Resources Subcommittee on Oversight and Investigations will hold a hearing on “politically-driven science" on Wednesday.
The House Agriculture Subcommittee on Conservation and Forestry will discuss the National Forest System and forest management on Wednesday. That same day, the House Science, Space and Technology Subcommittee on Environment will hear from Oklahoma and Wyoming officials on the impact of the Environmental Protection Agency’s proposed ozone standards on rural America.
Off Capitol Hill, Moniz addresses the United States Energy Association’s Membership Meeting and Public Policy Forum on Thursday. Nuclear Regulatory Commission Chairman Stephen Burns, World Energy Council Secretary General Christoph Frei and Federal Energy Regulatory Commissioner Philip Moeller also will attend.
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Obama’s Energy Chief Sees Common Ground with GOP
Apr 27, 2015 | The Hill - E2 Wire
By Devin Henry
Energy Secretary Ernest Moniz said he expects at least some cooperation from congressional Republicans on a handful of administration goals before President Obama’s term expires.
Moniz said he and other administration officials can work productively with congressional Republicans on issues, ranging from a nuclear deal with Iran to funding for energy related programs and climate change.
On Iran, the Senate is set to consider a bipartisan deal that would give Congress a say on any final nuclear deal. Moniz said congressional briefings on the Iran negotiations have been well attended, especially in the Senate, and the administration will continue to sell the deal on Capitol Hill, as it works out final terms with Iran.
“I think key members on both sides of the aisle, from my interactions with them, suggest sometimes a skepticism, but even then, an openness to understanding what the deal is,” Moniz said at aChristian Science Monitor event on Monday. “We’re just going to have to finish a deal, get an agreement and explain it clearly to the public and to Congress, and I am convinced that there will be enough people who are willing to be objective.”
Moniz will be at the Capitol on Tuesday to highlight the Obama administration’s energy infrastructure investment plan to a Senate committee. The plan calls for billions of dollars in infrastructure funding, and some congressional Republicans have said they are open to the plan, something Moniz said he expects will help his case.
The Obama administration included funding for aspects of the plan in its 2016 budget request, including a handful of small items Moniz said could be easy sells to Congress, such a grant program to help states invest in energy reliability programs.
Even so, the president’s overall recommendations are sizable, and Republicans control Congress, so there are significant hurdles in front of the plan.
“We are willing to discuss with Congress how we might address these infrastructure needs,” Moniz said.
The Energy secretary said Congress should look to lift the budget caps that have stunted spending on domestic policy programs, including energy issues. The House will vote this week on a bill funding energy and water programs, and the Obama administration and Democrats objected to several components of it, including its funding levels for energy research and renewable energy programs.
“Those early marks … are still in the budget cap land, sequester land,” he said.
There are even bigger fights on the horizon, too. The EPA is looking to finalize a rule clamping down on carbon emissions from power plants, something Republicans have bitterly opposed. The Obama administration is looking to forge a massive international climate accord later this year, and its past diplomatic efforts on the climate front have been poorly received by Republicans.
Despite the criticism, Moniz said a climate plan is something that has to happen sooner rather than later.
“We certainly need it, my view, in this decade, at most before the end of this decade,” he said. “I think that public opinion certainly will continue to go in the direction of supporting some political action.” -
Energy Secretary Moniz Emerges as Obama’s Secret Weapon in Iran Talks
Apr 27, 2015 | The Washington Post
By Steven Mufson
The Energy secretary’s job title has always been a bit of a misnomer. Nearly two-thirds of the department’s budget has nothing at all to do with energy. Instead, it is devoted to taking care of the nation’s nuclear weapons stockpile — and cleaning up radioactive waste from old weapons development sites.
Now that nuclear expertise has catapulted Energy Secretary Ernest Moniz, a physicist from the Massachusetts Institute of Technology, from this cabinet backwater to center stage in the international negotiations over Iran’s nuclear program. An unlikely breakout star, Moniz sports a long wavy mop of mostly white hair that has been compared to George Washington’s locks.
But the energy secretary is providing a knowledgable voice that the Obama administration hopes can reassure nervous members of Congress as they weigh the deal.
Moniz is someone who “can take complex issues and make the lay person understand them,” said Carol Browner, who was the top White House adviser on energy and climate issues during the first Obama term. “His ability to do that with members of Congress will be important.”
A Republican congressional staffer said “he’s not a policy wonk sitting around drawing two-by-two matrix models on a white board. He’s a physicist talking about what the technical capacities are. Moniz is able to speak a different language and translate that into better arguments than we’ve seen so far.”
Moniz, who likes to end his day with a drink, has suddenly found himself one of the Obama cabinet secretaries most in demand. Since returning from the Iran negotiations in Lausanne, Switzerland on April 3, he has traveled to Panama with President Obama on Air Force One ; briefed members of Congress on the Hill along with Secretary of State John F. Kerry and Treasury Secretary Jack Lew ; joined Vice President Biden in Philadelphia to talk about energy infrastructure ; and met, as a member of U.S.-Iraq Higher Coordinating Committee, with visiting Iraqi Prime Minister Haider al-Abadi. He also would have traveled to Beijing with the Commerce secretary but he couldn’t squeeze it in.
Moniz has been here before as under secretary for energy and associate director of the White House office of science and technology policy under President Bill Clinton. And he enjoys and is more adept at dealing with Congress, indeed perhaps more so than the president himself or many other administration members.
Faced with proposed legislation that would have forced the Energy Department to speed up decisions on applications to export liquefied natural gas, Moniz called the bill’s sponsor, Sen. John Hoeven (R-N.D.) and asked him to hold the bill so that the agency could work with the senator to craft a mutually acceptable version. In the end, the bill set the same time limit, but started the clock at a different point in the regulatory process. It left both the senator and the administration satisfied; committee members from both parties voted in favor of it.
“I appreciate Secretary Moniz reaching out to work with me to streamline the process,” Hoeven said in a statement.
Last August, Moniz trekked to Alaska with Sen. Lisa Murkowski (R-Alaska), before she became chairman of the Senate Energy and Natural Resources Committee. And he keeps in touch with Sen. Edward J. Markey (D-Mass.), who attended events with Moniz at MIT before Moniz became secretary.
Moniz took over from another physicist, Steven Chu, who had won the Nobel Prize for using lasers to freeze and trap atoms. Obama turned to Chu, too, for technical advice to figure out how to stop the massive BP oil spill in the Gulf of Mexico.
But Chu, previously a professor at Stanford and University of California, Berkeley, as well as director of the Lawrence Berkeley National Laboratory, often had strained relations with Congress. Lacking ties to the Hill, he found himself a frequent target when a solar manufacturer, which had received a half billion dollar loan guarantee from the Energy Department, went bankrupt; lawmakers raked through the department’s internal e-mails for evidence of political favoritism.
“I’d characterize him as a much better version of Chu — that he has scientific credibility but with a better attitude and political instincts — and more experience in D.C.,” said one of President George W. Bush’s top Energy Department officials. “Therefore, he does much better with Congress and does a much better job of running the department and engaging employees.”
Moniz has also paid attention to internal matters at the department, which he had long thought had been mismanaged. He created a new post — undersecretary for management. He has also recruited people from a wide variety of backgrounds including a White House lawyer, Duke Energy’s chief technology officer, the head of the Union of Concerned Scientists, the arms-control expert from the National Security Council, the head of an energy institute at Stanford University, and the retired commander of the Air Force Global Strike Command with control of U.S. intercontinental ballistic missiles and bomber planes.
Moniz was dispatched to Switzerland when Iran sent Ali Akbar Salehi, the head of the Iranian Atomic Energy Organization, to join the negotiations. Salehi did graduate work on fast neutron reactors at MIT, but he and Moniz did not meet there. But the two spoke the same technical language and were able to negotiate more fluently.
The two negotiated with small groups of others, but also spent many hours alone in face-to-face meetings. Doing so allowed other negotiators to focus on separate issues, such as sanctions relief. Salehi had at times been a critic of the negotiations so his participation was seen as an effort to finally hammer out acceptable terms.
“The role was fundamentally to resolve these technical dimensions,” Moniz said back in Washington. “In doing so, we can uncouple that part from the political dimensions of the agreement.”
Though Moniz only joined the Iran talks recently, the State Department had already been drawing on expertise at the nation’s national laboratories, a part of the Energy Department.
Moniz, too, has turned to teams of Energy Department experts from about eight different national laboratories, asking experts to check calculations about the “breakout time” Iran would need to accumulate material for a nuclear weapon and using “red teams” in the United States to try to figure out whether the terms of the agreement could be circumvented.
The lab experts often started working when the negotiators finished for the day and they had to hustle to get an analysis done by the time negotiators woke up. One lab expert said he had three 22-hour days in a row, staying up past 4 a.m. and returning by 8:30 a.m. to be on hand for any new questions.
“Basically our job was to address issues with major technical dimensions,” Moniz said. “What would an Iranian nuclear program look like over quite a few years to meet our requirements of confidence in the peaceful nature of the program, to be able to identify quickly if in fact activity were not in the bounds of the agreement and to provide enough time in that eventuality that we and our partners could respond appropriately.”
Back in Washington, Moniz says he works easily with Kerry, who he has known for more than a decade. Moniz was part of a group of energy experts who gave advice to Kerry’s presidential campaign in 2004.
It was just one way in which Moniz stayed engaged with Washington. At MIT, he co-chaired projects on the future of nuclear power and the nuclear fuel cycle. During the first Obama term, he was a member of the high-powered Blue Ribbon Commission on how to dispose of nuclear waste.
Before his nomination, he devoted himself to the “all-of-the-above” strategy for energy that Obama has embraced. In a voluminous written and spoken record, Moniz wrote in favor of nuclear power, research into carbon capture and storage for coal, renewable energy and shale gas produced by hydraulic fracturing.
All that has fed into this potentially historic moment on Iran.
“Now, if we are able to obtain a final deal that comports with the political agreement — and I say ‘if’ because that’s not yet final — then I’m absolutely positive that that is the best way to prevent Iran from getting a nuclear weapon,” Obama said in a briefing. “And that’s not my opinion; that’s the opinion of people like Ernie Moniz, my Secretary of Energy, who is a physicist from MIT and actually knows something about this stuff. That’s the opinion of a whole bunch of nuclear experts who examined the deal.”
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EPA Critics Revive ‘Health-Health’ Analysis To Fight Stricter Ozone NAAQS
Apr 27, 2015 | InsideEPA
By Stuart Parker
Critics of EPA’s proposed stricter ozone national ambient air quality standard (NAAQS) are reviving the idea of using a “health-health” analysis -- balancing health benefits of a stricter standard against health costs -- to help undermine the case for tightening the limit and circumvent a legal bar on considering costs in setting NAAQS.
EPA proposed revising the existing 2008 ozone standard of 75 parts per billion (ppb) down to a limit within a range of 65 ppb to 70 ppb. A standard set at 70 ppb would create $6.4 to $13 billion in health benefits and an even-stricter limit of 65 ppb would generate $19 to $38 billion in health benefits, compared to costs of $3.9 billion for a 70 ppb limit and $15 billion for a 65 ppb limit, EPA estimates. The agency bases the benefits on values such as avoidance of premature death, asthma attacks and missed work days.
Opponents of the rulemaking, however, counter that EPA is vastly underestimating the costs. Scott Bloomberg of NERA Economic Consulting told a recent Texas workshop on the ozone standard that a 65 ppb standard could create compliance costs annually of $16 to $155 billion, with $4 to $54 billion costs in Texas alone.
Anne Smith, also with NERA, told the Texas Commission on Environmental Quality’s (TCEQ) workshop in Austin that broader economic impacts beyond compliance costs could be $140 billion a year nationally.
But a Supreme Court decision from 2001 in Whitman v. American Trucking Associations, written by Justice Antonin Scalia, bars EPA from considering costs when setting the level of a NAAQS. The agency must set the level based solely on scientific information on what level would meet an air law mandate to be requisite to protect public health within an adequate margin of safety -- something GOP lawmakers and industry have long sought to change.
EPA can consider costs in its rules for how states should implement the NAAQS, but critics say that this is too late in the process and ignores the major costs associated with a tightening of the ozone limit.
TCEQ hosted its April 7-9 workshop to hear from a range of speakers opposed to a stricter limit, including toxicologists who made the scientific case for EPA to retain the existing 75 ppb standard.
Other speakers at the Austin workshop noted that the Clean Air Act sets binding compliance deadlines for areas to attain revised standards, limiting EPA and states’ room for mitigating costs during implementation. As a result, some speakers suggested reviving a health-health study approach to help fight a stricter rule.
Speaking at the TCEQ workshop, former White House Office of Management and Budget (OMB) official John Morall, now a professor with George Mason University, said a health-health analysis can get around the high court’s prohibition on considering costs when setting NAAQS. The concept is based on the idea that adverse economic effects stemming from a rule, such as reduced income or outright job losses, have adverse health impacts.
Legal Support
Health-health analysis attempts to monetize those adverse health impacts from a tighter ozone NAAQS and weigh them against the estimated health benefits of a more-stringent ozone standard, without regard to other implementation costs that do not impact public health. The technique ties income losses to health impacts by considering the “value of a statistical life” in terms of lives saved and lost as a result of stricter regulation.
Morall said advocates of health-health analysis can find legal support for their position in the concurring opinion written by Justice Stephen Breyer in Whitman, which found that EPA cannot satisfy the Clean Air Act mandate to set NAAQS “requisite to protect the public health” unless the standards have a net positive effect on public health. The EPA administrator can weigh relative health risks when setting the NAAQS, Breyer wrote.
The air law “permits the Administrator to take account of comparative health risks. That is to say, she may consider whether a proposed rule promotes safety overall. A rule likely to cause more harm to health than it prevents is not a rule that is ‘requisite to protect the public health,’” Breyer wrote.
Another early advocate of health-health analysis was Cass Sunstein, who served from 2009 to 2012 as the top official in OMB’s Office of Information & Regulatory Affairs and is seen as a strong supporter of cost-benefit analyses for rulemakings. While teaching at the University of Chicago law school, alongside then-law professor Barack Obama, Sunstein wrote of the need for federal agencies to more carefully evaluate “health-health tradeoffs,” considering the health-promoting effects of wealth observed by several academic studies.
For example, in one 1996 essay Sunstein wrote that, “Under existing law, agencies should often be understood to have the authority to engage in health-health tradeoffs, and they should exercise that authority far more often than they now do. Courts should play a modest but catalytic role in encouraging agencies to increase aggregate risk reduction. They should do so above all by adopting an interpretive principle authorizing agencies to undertake health-health tradeoffs unless Congress has spoken clearly to the contrary.”
Sunstein is widely thought to have been among the key figures involved in the Obama White House’s decision in 2011 to scrap an EPA proposal to tighten the Bush ozone NAAQS of 75 ppb down to a level of 70 ppb.
The administration decided at the time that because the rule resulted from a discretionary reconsideration prompted by environmentalists’ complaints that the Bush rule departed from its science advisors’ input, there was no need to revise the NAAQS and add to administrative burdens on states and industry. Instead, Obama said that EPA would update the NAAQS based on the air law’s mandate to review the standard every five years.
At the TCEQ workshop, Morall said that his own health-health analysis shows that a possible future ozone NAAQS set at 60 ppb or 65 ppb would produce net adverse outcomes, thus failing Breyer’s test in Whitman.
A standard set at 60 ppb would cost 900 lives, Morall estimated, and a standard at 65 ppb would cost 130 lives. A 70 ppb standard would produce a net benefit of 24 lives saved, using Morall’s methodology.
'Covert' Consideration
Former Justice Department (DOJ) attorney Thomas Lorenzen said at the workshop that the National Mining Association in its comments on EPA’s proposed ozone standard raised the health-health approach as a legitimate way to analyze the rule’s effects when setting the standard. Lorenzen, now a partner with Dorsey and Whitney, said he authored the comments himself. This is important from a legal standpoint because it establishes the principle in the administrative record, thus enabling industry to raise the issue in any litigation over the final rule.
Lorenzen -- who at DOJ successfully defended the 2008 ozone NAAQS against both industry and environmentalists’ lawsuits claiming it was too strict or too weak -- said costs are considered by EPA administrators “in a covert way.”
Due to the high costs of tightening the standard further, agency Administrator Gina McCarthy is very unlikely to set the final standard toward the bottom of the proposed 65 ppb to 75 ppb range, much less set it near the bottom of the 60 ppb to 70 ppb range recommended by EPA’s Clean Air Scientific Advisory Committee, he said. “I will eat my shoe” if McCarthy opts for 65 ppb, he added.
Despite the apparent revival of interest in health-health analysis, one legal scholar says that the approach is widely considered “thoroughly discredited,” and has not forced its way in EPA’s rulemaking so far.
The problem with health-health analysis in the context of setting the ozone NAAQS is threefold, the source says. First, it is predicated on the assumption that greater wealth produces better health, but this “is based on a correlation not causation.”
While greater wealth is associated with improved health, the relationship is complex, the source says. For example, better education is usually associated with better health, and many factors contribute to educational standards.
Second, there is no legal precedent for the use of health-health analysis in setting NAAQS, the source says, noting that Breyer mentioned it only “in passing” in his Whitman concurrence.
Third, by EPA’s estimates, the ozone rule’s health benefits will outweigh the implementation costs, in which case it could withstand legal scrutiny even if costs were considered when setting the standard. Health-health analysis would then be irrelevant, the source says.
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California Air Officials Float Plan To Ease Ozone NAAQS Implementation
Apr 27, 2015 | InsideEPA
By Stuart Parker
Officials with California’s San Joaquin Valley air district are floating a draft legislative proposal for Congress that they say would ease implementation of a potentially stricter EPA ozone national ambient air quality standard (NAAQS) by giving certain areas out of attainment with the standard more time to cut pollution and meet it.
California has severe ozone pollution problems and EPA has acknowledged this in its proposal to tighten the 2008 ozone standard of 75 parts per billion (ppb) to between 65 and 70 ppb. EPA in a fact sheet on the rule predicts health benefits of a 70 ppb standard at $6.4 to $13 billion compared to costs of $3.9 billion, and predicts national costs of $19 to $38 billion for a 65 ppb limit compared to $15 billion in costs of meeting that standard.
However, several areas in California are not required to meet the existing NAAQS by the 2025 deadline that other areas must meet, and may not be required to meet a stricter limit until sometime between 2032 and 2037, EPA says. As a result, the agency has estimated the costs and benefits of its proposal separate from other states.
In California, a 70 ppb standard would by 2025 yield annual health benefits of $1.1 billion to $2 billion compared to $800 million in costs, and $2.2 billion to $4.1 billion costs for a 65 ppb limit compared to $1.6 billion in costs.
But state officials are concerned about having to meet a stricter standard that moves closer to naturally occurring and foreign-sourced background levels of ozone that they cannot regulate. Fears over the difficulty in meeting a tighter limit, combined with air law deadlines for compliance, are prompting calls for changes to the Clean Air Act.
Regulators with the San Joaquin Valley air district, representing a large portion of California that experiences high ozone levels, are now pitching their draft legislative proposal that would leave the NAAQS-setting process unchanged, but give areas in nonattainment with the standard such as San Joaquin more time to cut emissions and comply.
Background ozone levels, resulting from foreign emissions and naturally occurring ozone, combined with the area’s topography, make for stubbornly high ozone levels in San Joaquin, which is classed in “extreme” nonattainment for the current ozone NAAQS of 75 ppb. Although this gives the area longer to attain the standard than elsewhere, until 2037, there is little prospect the area will attain, said Seyed Sadredin, chief of the air district, at a recent Texas Commission on Environmental Quality workshop that heard from various critics of a stricter NAAQS.
“At this point, technology does not exist to meet the standards,” said Sadredin, warning “it may be sheerly impossible” to meet them. The primary goal of the air district’s proposal is to buy time for compliance by removing air law time limits for extreme areas to attain, and instead require that such areas “shall attain the standard as expeditiously as possible with the most effective measures that take into account technological and economic feasibility.”
The air district proposes that the timing of various other air law implementation plan submissions be consolidated and that states be allowed to choose which ozone precursors to regulate, among other suggestions.
Sources with the air district say that they expect their proposal to be included in a new bill in Congress to be proposed by one or more lawmakers from California and elsewhere in the near future.
They also say that EPA has indicated some willingness to consider consolidating state air plan submission deadlines and allowing states to choose which ozone precursors to regulate.
However, an EPA spokeswoman would confirm only the agency has received the state’s proposal and is studying it.
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OSHA, Industry Groups Warn about Oil Tank Deaths
Apr 27, 2015 | E&E - Energywire
By Mike Soraghan
Federal worker safety officials and drilling industry groups are warning about the danger of petroleum vapors whooshing from crude oil tanks at well sites.
They are distributing a new alert to warn workers and others that the vapors can instantly kill workers who inhale them. It also warns that the highly flammable vapors could easily explode.
"Your life can change in a single breath or with one spark," the alert states in large type.
The alert was developed by the Occupational Safety and Health Administration, National Institute for Occupational Safety and Health, and National STEPS (Service, Transmission, Exploration and Production Safety) Network, an industry safety group.
"We expect that the infographic will be (conservatively) distributed to around 100,000 individuals in our industry segment throughout the US and Canada," STEPS Chairman Rick Ingram wrote in an email last week announcing OSHA's sign-off to those who'd worked on it.
Ingram said the hazards from petroleum vapors will be discussed further at a meeting of federal and industry safety officials May 21 in Houston.
The national alert is milder than one on the same topic issued in February by an industry safety group in the Bakken Shale region, where most of the known inhalation deaths have occurred. The February alert by the MonDaks Safety Network warned that "One breath could be death" (EnergyWire, Feb. 24).
At least nine oil workers have died since 2010 from inhaling toxic amounts of vapors while measuring crude oil in storage tanks at well sites, according to NIOSH (EnergyWire, April 13).
While many in the oil field recognize the lethal danger of hydrogen sulfide, or "sour gas," the hazard from volatile hydrocarbons remains poorly understood. There has been little mention of the petrochemicals, also called volatile organic compounds, or VOCs, in industry orientation materials.
All crude oil has compounds called volatile hydrocarbons such as benzene, butane and propane. Shale crude sometimes has more of these compounds than conventional oil. It's related to why shale oil is more prone to explode in rail cars. The chemicals bubble up from the crude oil and collect in storage tanks (EnergyWire, Oct. 27).
The vapors can disorient people to the point that they're unable to escape the lethal effect of the vapors.
OSHA researchers last year found levels of butane at a tank hatch 48 times the level considered to be an "immediate danger to life and health" (IDLH), and butane was only one of several compounds in the sample.
Public health researchers have indicated that the airborne chemicals that killed the workers also raise questions about whether the vapors pose a threat to people who live nearby. But they say there is little or no published research on the topic, and NIOSH researchers say their findings can be applied only to workplace hazards.
The only death in which OSHA is known to have cited an employer in connection with VOC inhalation hazards occurred last year in North Dakota. Zachary Buckles, 20, a flowback operator working at a Bakken Shale oil site across the Missouri River from Williston, N.D., died in late April. OSHA fined the company he worked for $2,800 for failing to train its workers in the hazards of petroleum vapors.
The alert says employers should assess worksites for inhalation risks and provide oxygen masks and monitoring devices to workers, along with training about the hazard. It also recommends finding ways for workers to measure the tanks without opening "thief hatches" by hand.
But in many states, including North Dakota, some crude oil measurements are required to be done by hand.
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