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ACC AM May 15
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(ACC Mentioned) Shale Gas Fueling Jobs Increase in US Plastics Industry
May 14, 2015 | Chem.Info
By Andy Szal
A chemical industry group expects domestic natural gas production to fuel hundreds of thousands of new jobs tied to plastics manufacturing. The report from the American Chemistry Council argued that the increase in U.S. natural gas production due to fracking turned the market dramatically in favor of American producers even after considering... -
(ACC Mentioned) Shale Gas Creating Renaissance in U.S. Plastics Manufacturing
May 14, 2015 | Oil & Gas 360
The shale gas revolution is bringing plastic manufacturing back to the United States and making U.S. refiners more competitive globally, reports the American Chemistry Council (ACC). Due largely to plentiful and affordable natural gas and natural gas liquids from shale formations, U.S. jobs related to plastics manufacturing are expected to grow... -
(ACC Mentioned) Report: Shale Boom Helps Plastics Industry Stage a Comeback
May 14, 2015 | My San Antonio
By Rhiannon Meyers
After a lengthy stagnation, the U.S. plastics industry is mounting a comeback thanks to a surge of cheap, abundant natural gas that’s providing the nation with a competitive advantage over other countries for the first time in years, a new report finds. The shale boom reversed fortunes for the U.S. plastics industry, which ranked among ... -
(ACC Mentioned) Shale Gas: Bringing In The Big Bucks To The Plastics Industry
May 14, 2015 | Bakken.com
By Danielle Wente
Thanks to the U.S.’s shale gas formations, the nation’s plastics industry has a new edge on the competition. According to the American Chemistry Council, the shale gas fields in the U.S. have brought in $130 billion in new capital investments. As reported by the Pittsburgh Business Times, “In a report looking at the rising competitive ... -
(ACC Mentioned) Study: Shale Growth Fueling Boom In Plastics Industry
May 14, 2015 | Times Oline
By J.D. Prose
Domestic plastics production and related manufacturing has a bright future because of the growth in shale natural gas and the resulting lower costs compared to European or Asian competitors, according to a recently released industry group study. “Shale gas development has reversed the fortunes of the U.S. plastics... -
(ACC Mentioned) House Panel Approves TSCA Act; Full Committee Looking at Markup Date
May 15, 2015 | BNA Daily Environment Report
By Pat Rizzuto
Draft legislation to better enable the Environmental Protection Agency to oversee the safety of chemicals in commerce and to ease state access to toxicity, exposure and other chemical data was unanimously approved by a House subcommittee. The House Energy and Commerce Environment and the Economy Subcommittee approved ... -
(ACC Mentioned) Subcommittee Passes TSCA Reform Measure
May 14, 2015 | E&E News PM
By Kevin Bogardus
A House Energy and Commerce subpanel today overwhelmingly approved legislation to reform the country's chemical safety regulations. The Environment and the Economy Subcommittee marked up the "TSCA Modernization Act of 2015" on a 21-0 vote, finding support from members of both parties. Rep. Paul Tonko (D-N.Y.), the... -
House Panel Unanimously Approves TSCA Bill But Policy Questions Linger
May 14, 2015 | InsideEPA
By Bridget DiCosmo
The House Energy & Commerce Committee's environment panel has voted unanimously to advance a Toxic Substances Control Act (TSCA) reform bill, though some lawmakers and advocates say policy questions linger including the scope of EPA's chemical reporting authority and the extent the agency could consider costs in regulating ... -
Manufacturers Urge EPA to Issue Rule Allowing More Uses for Refrigerant Chemical
May 15, 2015 | BNA Daily Environment Report
By Pat Rizzuto
Refrigerants with less global warming potential than the ones currently in use could be sold if the Environmental Protection Agency proceeds to issue a new use rule it proposed in April, according to chemical and technology manufacturers. “Allowing use of HFO-1234yf as a refrigerant in additional applications will reduce the global... -
EPA Developing Best Practices to Report Industrial Discharges of Chemicals to Utilities
May 15, 2015 | BNA Daily Environment Report
By Amena H. Saiyid
The Environmental Protection Agency plans to develop best management practices for Clean Water Act permit writers and pretreatment coordinators to report and monitor industrial discharges of hazardous chemicals to wastewater treatment plants, an agency official said May 13. The agency also plans to clarify reporting guidelines... -
EPA Superfund Cleanup Enforcement Guide Prompts Industry Concerns
May 14, 2015 | InsideEPA
By Suzanne Yohannan
Industry attorneys are expressing concern over a Superfund enforcement guidance EPA issued last month, saying the document's call for regional offices to incorporate financial assurance requirements into cleanup settlements and unilateral administrative orders (UAOs) could increase potentially responsible parties' (PRPs) costs and restrict the ... -
Homeland Security Releases Guidance For Expedited CFATS Security Plan Approval
May 15, 2015 | BNA Daily Environment Report
By Anthony Adragna
New guidance from the Department of Homeland Security will allow lower-risk facilities regulated under a program to protect the nation's industrial sites from the risks of terrorist attacks to have their site security plans approved more quickly. The guidance, issued May 13, carries out a provision in a four-year extension of the Chemical Facility... -
Explicit Fracking Ban Expected to Follow New York's Environmental Impact Statement
May 15, 2015 | BNA Daily Environment Report
By Gerald B. Silverman
While New York state's long-awaited environmental impact statement (EIS) on fracking doesn't explicitly ban the natural gas drilling practice, sources on both sides of the issue told Bloomberg BNA that there's no doubt an official ban will be put in place when the state environmental conservation commissioner issues a “findings statement.” -
Obama Defends Arctic Drilling Decision
May 14, 2015 | The Hill - E2 Wire
By Timothy Cama
President Obama on Thursday defended his administration’s decision to allow offshore oil and natural gas drilling in the Arctic Ocean, a move that has been the subject of criticism from environmentalists. Obama told reporters that although he wants the country to move completely away from fossil fuels at some point, domestic oil and natural ... -
Murkowski Says It ‘Makes Sense' to Have Oil Export Bill in Broader Energy Package
May 15, 2015 | BNA Daily Environment Report
By Ari Natter
The chairman of the Senate Energy and Natural Resources Committee said May 14 that she is inclined to include standalone legislation that would end the 40-year ban on the export of domestic crude oil as part of a broader energy package the committee is drafting. “I'd like to have it in there,” Sen. Lisa Murkowski (R-Alaska) told reporters. -
House Lawmakers Slam White House For Pipeline Delay
May 15, 2015 | E&E News PM
By Daniel Bush
Approving the Keystone XL pipeline and lifting the decades-old ban on crude oil exports would boost domestic energy security and increase fossil fuel production in neighboring countries, several House lawmakers said yesterday. Members of the House Foreign Affairs Subcommittee on the Western Hemisphere slammed the White... -
Conflict of Interest Reported in Study on Drilling Fluids Likely Link to Water Pollution
May 15, 2015 | BNA Daily Environment Report
By Tripp Baltz
The Proceedings of the National Academy of Sciences has issued an apology for confusion over two different conflict-of-interest statements connected with a recent study that found drilling fluids likely leaked into drinking water wells in Pennsylvania. When the PNAS first received the paper, “Evaluating a groundwater supply... -
Pennsylvania Lawmakers' Tax Proposals Would Tap Into Marcellus Shale Resources
May 15, 2015 | BNA Daily Environment Report
By Leslie A. Pappas
With Marcellus Shale deposits now pumping out more than a third of the shale gas produced in the United States, Pennsylvania lawmakers are hoping to stake a claim on the state's natural gas production by introducing severance tax proposals to mine their state's new natural resource riches. “People have said Pennsylvania is the Saudi Arabia... -
Oil lobby launches ads against EPA ozone rule
May 14, 2015 | The Hill - E2 Wire
By Timothy Cama
The oil industry is launching a multimedia advertising campaign tomorrow in opposition to the Obama administration’s attempt to restrict allowable concentrations of ozone pollution. The campaign from the American Petroleum Institute (API) reinforces the industry’s belief that the current ozone standards, set in 2008, are sufficient... -
API Launches Ads Hitting EPA’s Ozone Proposal
May 14, 2015 | PoliticoPro
By Alex Guillén
The American Petroleum Institute is launching a new ad campaign against EPA’s proposal to tighten ozone standards. “We think it’s important to get the ads out there to let people know how important this issue is,” Howard Feldman, API’s director of regulatory and scientific affairs, told reporters. The ozone rule is “flying under the radar... -
Manchin, Heitkamp Promote 5 Bills For Broad Energy Package
May 15, 2015 | E&E Daily News
By Manuel Quiñones
Sens. Joe Manchin of West Virginia and Heidi Heitkamp of North Dakota are hoping a new package of bills aimed at boosting coal's fortunes finds its way into a broader energy package. The Democrats introduced the five measures this week and promised to find a viable path for coal amid concerns about carbon emissions. -
Hearing Illustrates Balancing Acts Energy Bill Writers Face
May 15, 2015 | E&E Daily News
By Nick Juliano
Several points of tension emerged yesterday as senators considered how best to address the nation's energy infrastructure needs, including the balance of state and federal decisionmaking authority, the role of distributed generation in providing reliable energy and the extent to which utilities should be required to purchase renewable ... -
Study Maps Hundreds Of Methane Gas Leaks Under Streets In L.A. Region
May 14, 2015 | LA Times
By Tony Barboza
An environmental group has identified nearly 250 locations where planet-warming methane is leaking from natural gas lines under streets in the Greater Los Angeles region. Environmental Defense Fund researchers outfitted a Google Street View mapping car with real-time air monitoring equipment that can detect elevated levels of methane... -
CEQ Suggests Dropping Disputed 'Upstream/Downstream' Plan In GHG Guide
May 14, 2015 | InsideEPA
By Dawn Reeves
The White House Council on Environmental Quality (CEQ) is hinting that it could drop language from its draft National Environmental Policy Act (NEPA) guidance urging federal agencies to consider upstream and downstream greenhouse gas (GHG) impacts of projects, a move that would undercut advocates' efforts to force such reviews. -
McCarthy Asks Businesses to Speak Up On Economics of Climate Change Action
May 15, 2015 | BNA Daily Environment Report
By Andrea Vittorio
Environmental Protection Agency Administrator Gina McCarthy is urging businesses to keep touting the economic benefits of acting on climate change. “The business community can speak to people in ways that EPA cannot,” McCarthy said May 14 at the 2015 Ceres conference in San Francisco. “People trust businesses to speak about... -
Fossil Fuel Industry Said Looking at Ways To Ensure Its Part in Low-Carbon Future
May 15, 2015 | BNA Daily Environment Report
By Joyce E. Cutler
The fossil fuel industry accepts climate change as a reality and now is considering ways to ensure it has a slice of the marketplace, Environmental Protection Agency Administrator Gina McCarthy said. Climate change presents an opportunity for the United States to advance technologies, which is where the energy world is investing its money... -
Virginia's Coal Ash Regulations Weak, Environmental Groups Say
May 15, 2015 | BNA Daily Environment Report
By Jeff Day
Virginia's regulations governing the disposal and storage of coal ash are woefully weak, allowing hazardous coal ash ponds and unlined coal ash pits to remain in place where they pose significant human and environmental health risks, according to a new report. Produced by the Virginia Conservation Network in partnership with Clean Water... -
Manchin, Heitkamp Introduce Slew of Bills to Promote Clean Coal Technologies
May 15, 2015 | BNA Daily Environment Report
By Anthony Adragna
Moderate Democratic Sens. Joe Manchin (W.Va.) and Heidi Heitkamp (N.D.) introduced five bills the week of May 11 that they said would provide a “viable path forward” for coal to remain a strong part of the national energy mix. “It's time for both sides of the debate about coal to get on board with the fact that coal is a reliable and abundant ... -
Senate to Mark Up Energy, Water Appropriations Bill
May 15, 2015 | BNA Daily Environment Report
The Senate's fiscal year 2016 energy and water appropriations bill is expected to be marked up by an Appropriations subcommittee May 19, Tom Mentzer, a spokesman for Sen. Dianne Feinstein, the top Democrat on the Subcommittee on Energy and Water Development, told Bloomberg BNA May 14. -
White House Meeting With Stakeholders On Hot-Button Rule
May 14, 2015 | E&E News PM
By Annie Snider
The White House has held at least 12 meetings with stakeholders on a proposed water rule, as the Obama administration puts its finishing touches on the regulation. Since April 15, groups including the U.S. Chamber of Commerce, Trout Unlimited and the state of Oklahoma have sent staff to meetings at the White House Office of... -
(ACC Mentioned) Shippers Hoist By Own Petard At House Hearing
May 14, 2015 | RailwayAge
By Frank N. Wilner
Poor Mr. Dooley—Calvin, that is, president of the American Chemistry Council and not the fictional Mr. Dooley created during the late 19th century by humorist Finley Peter Dunne. The latter gained library space in Teddy Roosevelt’s White House; the former seemed to hoist himself by his own petard—Shakespeare speak (“Hamlet”) for the bomb... -
Public Interest Groups Petition Ninth Circuit To Review Provisions of Crude-by-Rail Rule
May 15, 2015 | BNA Daily Environment Report
By Rachel Leven
Several public interest groups, including the Sierra Club, petitioned a federal appeals court May 14 to review a Transportation Department rule on rail shipments of flammable liquids (Sierra Club v. Foxx, 9th Cir., docket number unavailable, 5/14/15). The Pipeline and Hazardous Materials Safety Administration was arbitrary and capricious... -
U.S. Crude-by-Rail Rules Face Fresh Challenge
May 14, 2015 | The Wall Street Journal
By Laura Stevens
Environmental groups are the latest challengers to push back against the new crude-by-rail rules with filings in federal court that argue the new regulations are too weak. Earthjustice filed a petition with the U.S. Court of Appeals for the Ninth Circuit in San Francisco on Thursday on behalf of seven nonprofits, arguing the timeline to phase out...
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(ACC Mentioned) Shale Gas Fueling Jobs Increase in US Plastics Industry
May 14, 2015 | Chem.Info
By Andy Szal
A chemical industry group expects domestic natural gas production to fuel hundreds of thousands of new jobs tied to plastics manufacturing.
The report from the American Chemistry Council argued that the increase in U.S. natural gas production due to fracking turned the market dramatically in favor of American producers even after considering the dramatic decline in oil prices in recent months.
U.S. plastics producers generally use natural gas as a feedstock while European and Asian companies base their plastics manufacturing primarily on oil feedstock.
As a result, the ACC reported that it's currently tracking more than $130 billion in planned chemical manufacturing capacity increases in the U.S.; the plastics industry alone accounts for $47 billion in investments since 2010.
Once completed, the report anticipates that those projects will lead to 127,500 jobs in the plastics industry over the next decade.
The combined number of new jobs related directly or indirectly to plastics, meanwhile, exceeds 460,000 over that span.
“A decade ago, the United States was among the highest-cost plastics producers,” ACC plastics vice president Steve Russell said in a statement. “Today, America is one of the most attractive places in the world to invest in plastics manufacturing."
The group suggested that the increased production would go toward the automotive, construction and packaging industries, while export increases would more than triple the nation's current plastics trade surplus. Topics BusinessChemicalsExclusiveOil / Natural Gas Advertisement Share this Story Share on reddit Comments Search form Search -
(ACC Mentioned) Shale Gas Creating Renaissance in U.S. Plastics Manufacturing
May 14, 2015 | Oil & Gas 360
The shale gas revolution is bringing plastic manufacturing back to the United States and making U.S. refiners more competitive globally, reports the American Chemistry Council (ACC). Due largely to plentiful and affordable natural gas and natural gas liquids from shale formations, U.S. jobs related to plastics manufacturing are expected to grow by 462,000 over the next decade – more than 20% – reaching more than 2.7 million.Cheap and abundant shale gas has breathed new life into the U.S. plastics manufacturing sector, based on a new study titled “The Rising Competitive Advantage of U.S. Plastics.” The study points out, since U.S. producers predominantly use natural gas-based feedstocks, and European and Asian producers generally use oil-based feedstocks, the spread between feedstock prices has made U.S. producers more competitive, even after the recent oil price decline.
Increasing competitiveness is expected to bring more jobs back to the U.S. as new investment expands the industry. ACC’s report found that new investment could create hundreds of thousands of permanent jobs up and down the supply chain over the next decade. In addition to the anticipated 462,000 manufacturing jobs, the analysis project nearly 97,000 temporary jobs will be created during the peak of the construction phase.
Attracting new investment
“A decade ago, the U.S. was among the highest-cost plastics producers,” said Steve Russell, ACC’s vice president of plastics. “Today, America is one of the most attractive places in the world to invest in plastics manufacturing. Even after recent declines in oil prices, our nation has a decisive edge.”plastics
Based on the ACC’s analysis, the combined output from the new investments in resin, compounding and ancillary chemistries (additives, colorants, ect.) and products will be $46.8 billion. Many of the new investments are export-oriented. Recent work by Nexant Consulting found that between 2014 and 2030, net plastic resin exports will more than triple, rising nearly $15 billion from $6.5 billion to $21.5 billion.
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(ACC Mentioned) Report: Shale Boom Helps Plastics Industry Stage a Comeback
May 14, 2015 | My San Antonio
By Rhiannon Meyers
After a lengthy stagnation, the U.S. plastics industry is mounting a comeback thanks to a surge of cheap, abundant natural gas that’s providing the nation with a competitive advantage over other countries for the first time in years, a new report finds.
The shale boom reversed fortunes for the U.S. plastics industry, which ranked among the highest-cost producers in the world just a decade ago, according to a new report released by the American Chemistry Council, an industry trade group.
“Today, America is one of the most attractive places in the world to invest in plastics manufacturing,” Steve Russell, the council’s vice president of plastics said in a statement. “Even after recent declines in oil prices, our nation has a decisive edge.”
That’s largely because U.S. manufacturers use raw materials derived from natural gas to produce plastic, in contrast with European and Asian producers that typically rely on oil-based feedstocks, the report found. Domestic plastic makers have been capitalizing on the flood of inexpensive natural gas unleashed in recent years by advances in horizontal drilling and hydraulic fracturing techniques, lowering the cost of U.S. production compared to other countries.
The U.S. has maintained that edge, despite a global crude slump that has buoyed overseas plastics makers, maintaining is position as one of the lowest-cost ethylene producers behind the Middle East and Canada, according to the council.
With access to cheaper feedstocks, U.S. plastics producers are beefing up their plants and preparing to produce more plastic, much of which will be shipped to Asia, Latin America and Europe, the council said. Between 2014 and 2030, net exports of plastics leaving the U.S. are expected to triple from $6.5 billion to $21.5 billion, according to a report by Nexant Consulting cited by the chemistry council.
Shale gas has credited for a renaissance in the U.S. petrochemical industry, but the newly released American Chemistry Council report throws new data behind those assertions.
The industry is expected to spend $46.8 billion in the next decade to manufacture more resin, increase its capacity in plastics compounding, additives and colorants used to transform resins into plastic products, and expand its ability to consume resin that’s not exported, according to the council’s analysis of company announcements made through March.
Some of those investments are slated for the Gulf Coast.
“The Gulf Coast is already a world class energy center with substantial technical expertise, distribution capabilities, and deep manufacturing know-how,” Russell said. “The companies that operate in the Gulf Coast are world leaders with a global footprint.”
Chevron Phillips Chemical is building two new polyethylene units in Old Ocean, near its Sweeny plant in Brazoria County, which are slated for completion in 2017. The units will convert ethylene into pellets that can be sold, melted and formed into a variety of industrial and household plastics. And in December, Ineos Olefins & Polymers USA broke ground on a $500 million expansion at its La Porte manufacturing complex to produce more high-density polyethylene, which is used to make plastic bags, bottles, jugs and pipes.
Overall, plastics industry investments are expected to generate 127,000 new high-paying jobs, the report said. Workers at plastics materials plants, on average, earn $85,000 per year, the council said.
“(That’s) more than 73 percent higher than the average wage for workers across U.S. industries,” Russell said in a statement. “Compares are ‘re-shoring’ jobs to the U.S. as new manufacturing is increasingly being located here at home.
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(ACC Mentioned) Shale Gas: Bringing In The Big Bucks To The Plastics Industry
May 14, 2015 | Bakken.com
By Danielle Wente
Thanks to the U.S.’s shale gas formations, the nation’s plastics industry has a new edge on the competition.
According to the American Chemistry Council, the shale gas fields in the U.S. have brought in $130 billion in new capital investments. As reported by the Pittsburgh Business Times, “In a report looking at the rising competitive advantage of the U.S. plastics industry, the council found that inexpensive supplies of natural gas are tipping the favor of the plastics industry toward the U.S.” The reasoning for this is due to plastics producers, specifically in North America, using natural gas as a feedstock, rather than oil like other places around the world.
As the report states:
Because energy resources — which account for up to 70 percent of total costs for plastic resin producers — are the primary raw materials to make plastic resins, the price of energy feedstocks is critical to the global competitiveness of plastic resin producers.”
The council said that due to the advantage the U.S. has, “it is tracking billions in new manufacturing capacity,” including an estimated $25 billion in investments from the production of polyethylene. The council also believes that the investments have the potential to create 127,500 jobs. President of the Marcellus Shale Coalition Dave Spigelmyer commented on how the shale fields in Pennsylvania could be a way for the state to regain its title as a leading manufacturer in the industry:
Shale development continues to be a powerful economic engine, especially for our manufacturing sector, as this new report and countless others reflect … To make certain that we fully realize these broad-based benefits for all of Pennsylvania, leaders in Harrisburg should pursue commonsense policies aimed at attracting more investment into the Commonwealth and creating even more jobs.”
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(ACC Mentioned) Study: Shale Growth Fueling Boom In Plastics Industry
May 14, 2015 | Times Oline
By J.D. Prose
Domestic plastics production and related manufacturing has a bright future because of the growth in shale natural gas and the resulting lower costs compared to European or Asian competitors, according to a recently released industry group study.
“Shale gas development has reversed the fortunes of the U.S. plastics industry,” the authors of the American Chemistry Council (ACC) study wrote in their introduction. “Because the competitiveness of plastic resins depends on energy costs — in particular, the difference between oil and natural gas prices — the surge of natural gas production from shale has changed the competitive landscape for U.S. plastics.”
That’s good news for Shell Chemicals and those who support its proposed ethane cracker plant for Potter Township because the plant will produce polyethylene pellets used in plastics manufacturing.
“Shale development continues to be a powerful economic engine, especially for our manufacturing sector, as this new report and countless others reflect,” said Dave Spigelmyer, the president of the North Fayette Township-based Marcellus Shale Coalition. “We have a truly historic opportunity to reestablish Pennsylvania as a leading manufacturing state thanks to our abundant natural gas base coupled with a second-to-none workforce.”
A key factor in domestic plastics production estimated growth is the cost difference between shale natural gas, the feedstock for U.S. plastics companies and the oil-based feedstock used by European and Asian makers.
The high costs for gas feedstock in the early 2000s have fallen for U.S. producers and that has fueled the resurgence in manufacturing and the rosy outlook for the next decade or more.
An accompanying fact sheet with the study said that the plastics industry has announced nearly $47 billion in domestic investment for the next decade, including $25 billion in new production capacity for plastic resins, which include polyethylene.
Shell’s plant has been estimated to cost at least $2.5 billion.
Total investment in chemical manufacturing capacity is pinned at $130 billion by the ACC.
As a result of those investments, the ACC said the plastics industry will “directly generate” 127,500 jobs and another 172,900 indirect jobs in related industries that supply materials, utilities, parts and services.
Those U.S. workers will receive $19.1 billion in wages with local spending expected to support 161,000 additional jobs in other business areas, the ACC estimated. Shell has said its cracker plant will employ about 400 permanent workers.
Other estimates have pegged the number of construction jobs created during the two- to three-year building peak as possibly reaching 10,000.
“To make certain that we fully realize these broad-based benefits for all of Pennsylvania, leaders in Harrisburg should pursue commonsense policies aimed at attracting more investment into the Commonwealth and creating even more jobs,” Spigelmyer said.
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(ACC Mentioned) House Panel Approves TSCA Act; Full Committee Looking at Markup Date
May 15, 2015 | BNA Daily Environment Report
By Pat Rizzuto
Draft legislation to better enable the Environmental Protection Agency to oversee the safety of chemicals in commerce and to ease state access to toxicity, exposure and other chemical data was unanimously approved by a House subcommittee.
The House Energy and Commerce Environment and the Economy Subcommittee approved the Toxic Substances Control Act Modernization Act of 2015 on May 14 with a vote of 21 Republicans and Democrats.
The draft bill would give the EPA greater authority to obtain toxicity and other data from chemical manufacturers and processors, direct the agency to review chemicals on the market using one of two mechanisms, and require the EPA to issue final regulations if it concludes exposure to the chemical could injure human health or the environment.
The full Energy and Commerce Committee is considering marking up the bill next week, a committee aide told Bloomberg BNA.
“The House draft and the Senate bill that has passed with bipartisan support out of the Environment and Public Works Committee complement each other and provide a path forward to passage of TSCA reform this year,” Cal Dooley, president and chief executive officer of the previous hitAmerican Chemistry Councilnext hit said in a statement.
Dooley referred to the Frank R. Lautenberg Chemical Safety for the 21st Century Act (S. 697), which the Senate Environment and Public Works Committee approved with a 15-5 bipartisan vote April 28 (82 DEN A-9, 4/29/15).
Key Changes
Provisions included in the marked up House draft legislation that differ from a previous draft, which was subject to an April 14 subcommittee hearing, include that the marked up legislation would:
• grandfather in state and local chemical regulations issued before Aug. 1, 2015;
• grandfather in existing and future requirements issued under Proposition 65, California's landmark right-to-know law, officially known as the Safe Drinking Water and Toxic Enforcement Act;
• specifically allow state regulations addressing air, water quality, waste treatment and waste disposal;
• establish a TSCA Service Fee Fund where fees paid under provisions of the law would be collected for the EPA's use;.
• give the EPA explicit authority to proceed to assess the risks of dozens of chemicals it already has placed on what is called its Work Plan list;
• require the same deadline for industry-initiated risk evaluations as for ones the agency initiates; and
• delete a section in the original draft that would have required the EPA to update the TSCA inventory of chemicals that are or have been made or sold in the U.S.
The subcommittee also approved during the markup an amendment designed to clarify that the legislation would protect civil tort actions for damages under state laws.
Members Praise Efforts
Rep. Diana DeGette (D-Col.) said the approved version of the TSCA Modernization Act addressed several changes she had requested in a May 7 letter to Subcommittee Chairman Rep. John Shimkus (R-Ill.) and ranking member Rep. Paul Tonko (D-N.Y.).
“I am more optimistic than ever that we can get something done this Congress,” DeGette said.
Her congenial tone was echoed by Republicans and other Democrats in their comments.
“This draft represents a lot of hard work and willingness to compromise,” Tonko said. “We have found common ground on many difficult issues. We truly have been partners in this effort. And, I appreciate the constructive process that has brought us to this point.”
Rep. Fred Upton (R-Mich.), chairman of the full House Committee on Energy and Commerce, said: “The bipartisan bill continues to strike a fair balance between facilitating interstate and international commerce and the role of the states in protecting both human health and the environment and its citizens' rights to seek private remedies under tort and contract law.”
Shimkus, DeGette: More Work Needed
Still, Shimkus and other subcommittee members said the draft still needs work.
“We still have a long way to go,” Shimkus said.
Reps. Bill Johnson (R-Ohio) and Kurt Schrader (D-Ore.) said they are working to address concerns some electronics manufacturers repeatedly have raised about ways they say the EPA's Chemical Data Reporting rule discourages metals recycling (84 DEN A-5, 5/1/14).
DeGette's letter raised several concerns that weren't addressed in the marked up legislation.
These include giving the EPA the authority to require that chemical manufacturers provide toxicity or other chemical data even if the agency has not made a determination that a chemical may pose an unreasonable risk.
EPA should have authority to request data without committing to a resource-intensive risk evaluation, DeGette wrote.
Her letter raised concerns that the TSCA Modernization Act gives regulated industries too much power in determining which chemicals in commerce the agency must evaluate for risk.
DeGette also said the bill fails to draw a bright line between the agency's determination that a chemical poses a risk—a conclusion the agency should reach without considering costs, she said—and the agency's regulatory decision that would involve a consideration of costs.
“Without this clarification, EPA and courts may interpret ‘unreasonable risk' as a safety standard requiring consideration of costs and a balancing of costs and benefits,” DeGette wrote.
DeGette referred to the U.S. Court of Appeals for the Fifth Circuit's interpretation of TSCA's unreasonable risk standard that is among the reasons that court overturned the agency's 1989 ban of asbestos (Corrosion Proof Fittings v. EPA, 947 F.2d 1201, 33 ERC 1961 (5th Cir. 1991)).
Environmental Organizations Remain Concerned
Richard Denison, a senior scientist with the Environmental Defense Fund, and Andy Igrejas, director of the 450-member coalition of advocacy groups called Safer Chemicals, Healthy Families have told Bloomberg BNA their organizations share the concern DeGette voiced about the draft bill being interpreted to require the agency to consider costs as it makes safety determinations and about a provision that would allow chemical manufacturers to essentially direct the agency's evaluations of chemicals in commerce.
The bill's drafters have added language to the legislation that nearly, but not quite, makes clear when the EPA could consider costs and when it couldn't, Igrejas told Bloomberg BNA.
Safer Chemicals, Healthy Families plans to continue working with House members to clarify that point, he said.
However, “EPA still has no discretion to turn down an industry request to initiate a risk evaluation. Taken literally, EPA could wind up spending most of its time responding to industry requests to assess chemicals, rather than evaluating the chemicals that pose the biggest threat to public health and the environment,” Igrejas wrote in a May 13 blog.
Trade Associations Praise
In addition to the American Chemistry Council, many trade associations issued statements praising the marked up TSCA Modernization Act.
“The TSCA Modernization Act would establish a science-based chemicals management program, assuring consumers that chemicals in household products have been evaluated and found to meet a risk-based safety standard by scientists at the Environmental Protection Agency,” said Phil Klein, association executive vice president, legislative and public affairs for the Consumer Specialty Products Association. “CSPA has been working towards bipartisan modernization of TSCA for six years, and this new draft bill is a big step in bringing U.S. chemical safety laws into the 21st century,” Klein continued.
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(ACC Mentioned) Subcommittee Passes TSCA Reform Measure
May 14, 2015 | E&E News PM
By Kevin Bogardus
A House Energy and Commerce subpanel today overwhelmingly approved legislation to reform the country's chemical safety regulations.
The Environment and the Economy Subcommittee marked up the "TSCA Modernization Act of 2015" on a 21-0 vote, finding support from members of both parties. Rep. Paul Tonko (D-N.Y.), the subcommittee's ranking member, offered an amendment making "technical changes" to the legislation, which was adopted by voice vote.
Republicans and Democrats were able to negotiate the text of the bill, coming up with a draft legislation earlier this week that was released with support from prominent members of the committee (E&E Daily, May 13).
"Today marks another step in the process, but we still have a long way to go. That said, I'm more encouraged now than ever that we can get to the finish line," Rep. John Shimkus (R-Ill.), the subcommittee's chairman, said about the bill at today's markup.
Tonko said there was a "constructive process" in place to craft the legislation, calling the bill a "good product." The Democrat noted, however, that lawmakers still have more work to do on the chemical safety bill.
"We still have additional work to do on some issues," Tonko said. "There are still some important constituencies that may have concerns."
The bill will now move onto the full Energy and Commerce Committee.
The effort to reform chemical safety rules has drawn support from industry groups. The American Chemistry Council sent a letter of support for the draft bill to Shimkus and Tonko yesterday.
"The draft provides for a strong and cohesive federal system while maintaining a role for states in the protection of their citizens and environment, and it provides [U.S. EPA] the additional resources necessary to evaluate risks," Cal Dooley, president and CEO of the chemical trade group, said in the letter.
Some environmental groups, however, blasted the legislation and charged it does not do enough to strengthen public health protections against toxic chemicals.
"The proposal being considered this week in the House falls short of what is needed to redress decades of neglect under a weak federal policy that resulted in a legacy of malfeasance by the chemical industry," Ken Cook, president of the Environmental Working Group, said in a statement yesterday.
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House Panel Unanimously Approves TSCA Bill But Policy Questions Linger
May 14, 2015 | InsideEPA
By Bridget DiCosmo
The House Energy & Commerce Committee's environment panel has voted unanimously to advance a Toxic Substances Control Act (TSCA) reform bill, though some lawmakers and advocates say policy questions linger including the scope of EPA's chemical reporting authority and the extent the agency could consider costs in regulating substances.
The recently revised House bill, known as the TSCA Modernization Act, was approved in a 21-0 bipartisan vote by the subcommittee during a May 14 markup. The draft bill now advances to the full energy committee, where it already appears to have the support of committee leadership from both parties.
Lawmakers engaged in minimal debate during the brief markup, although environment subcommittee ranking member Rep. Paul Tonko (D-NY) offered an amendment that aims to clarify that civil tort claims would not be affected by preemption language in the bill. The amendment was agreed to by voice vote.
Efforts to advance legislation in the Senate to overhaul the 1976 TSCA are also gathering momentum, after the upper chamber's Environment & Public Works Committee (EPW) in April approved a bipartisan reform bill introduced by Sens. David Vitter (R-LA) and Tom Udall (D-NM). Senators are seeking to limit amendments on the bill, S. 697, during floor debate in order to try and retain broad backing for it.
In the House, Democrats and Republicans alike have spoken in support of their bill, which is much more scaled-back than the Senate version and has been revised from an earlier draft.
Rep. John Shimkus (R-IL), chairman of the energy panel's environment subcommittee, in early April released the first draft of the legislation that gained a cautious welcome from some Democrats, as it appeared to include far less sweeping preemption and other provisions that have prompted concern from environmentalists, Sen. Barbara Boxer (D-CA) and other Democrats, and other stakeholders in the Vitter-Udall bill.
While the unanimous vote in the environment subcommittee reflects broad support for the measure, lawmakers at the markup indicated parts of the bill that require further clarification.
Reps. Bill Johnson (R-OH) and Kurt Schrader (D-OR) voiced concerns about language that had been removed from the newly revised bill but had been included in an earlier draft that would modify section 8(b) of TSCA, which establishes reporting requirements. The language would require EPA to periodically collect data as needed to remove chemicals from the TSCA inventory if they are no long manufactured or processed in the United States.
Shimkus at the markup said that lawmakers removed the language after some stakeholders voiced concerns that it was unnecessary and duplication of existing EPA authority, but urged lawmakers interested in drafting new provisions to work with the bipartisan coalition on modifying the language.
Johnson said the language could create incentives for landfilling chemicals that could otherwise be recycled for beneficial purposes.
Schrader said he is “looking forward to working on the section 8 provision,” and that “we all understand there is a little more work to do.”
State Preemption
The updated House draft takes further steps to try to address concerns from various groups, including adopting language that would “grandfather,” or preserve, existing state chemical laws enacted prior to Aug. 1, 2015 if they do not conflict with federal TSCA requirements.
One environmentalist notes that the new language is “clearer” than the grandfathering language in the S. 697 Senate bill. Moreover, that source says that the House bill's preemption language, which mirrors current law, “does not have the regulatory pause” that critics of the Senate bill say leaves a gap in regulation while EPA reviews a chemical.
During the May 14 markup, Rep. Jerry McNerney (D-CA) said he believed negotiations over the revised bill have “worked through” the problems with preemption, noting that California set a “high bar” for the issue because of its concerns about its green chemistry program and its Proposition 65 law.
Preemption has been a major flashpoint in the debate over how to reform the decades-old chemical safety law. The updated House bill would preempt new state chemical requirements other than those identical to EPA actions once the agency enacts a restriction or determines that a chemical meets the safety standard.
For example, Boxer opposes the Senate bill in part over the preemption language and has vowed to introduce dozens of amendments when the bill is debated on the Senate floor.
At the April 28 EPW markup -- where S. 697 cleared the committee in a 15-5 vote -- Boxer supported an amendment offered by Sen. Kirsten Gillibrand (D-NY), that would have adopted the House preemption language.
Risk Evaluations
Meanwhile, one environmentalist says further clarification is needed for the House bill on how and when during risk evaluation the agency is to consider cost of restricting a chemical and that a provision must be added to “cap” the number of chemicals for which manufacturers may request agency reviews.
The updated House bill seeks to address concerns raised by EPA and environmentalists over the language in section 6 of TSCA that outlines when EPA would consider cost in making chemical safety decisions.
The bill language previously said EPA in deciding whether to craft a TSCA rule must examine a host of factors including benefits and "reasonable ascertainable economic consequences."
EPA toxics chief Jim Jones during a hearing on the bill earlier this year called the language “ambiguous,” saying that it is "not clear how EPA is to consider cost" in determining whether to promulgate a 6(a) rule.
The revised language would require EPA to promulgate regulations that are "cost-effective, except where the Administrator determines that it is not practicable to protect against the identified risk using cost-effective requirements." The updated measure would instead shift the economic consideration to what type of requirement is needed, as opposed to whether to promulgate a rule under section 6.
But the environmentalist says it is not clear how courts will interpret the new language, and that further clarification is necessary before some advocates will endorse the bill. The concerns over the degree to which EPA may consider cost stem from a ruling in 1991 in which the U.S. Court of Appeals for the 5th Circuit struck down EPA's attempt to ban asbestos -- a known carcinogen -- under section 6, finding in Corrosion Proof Fittings v. EPA that the agency had not met its burden of proof to establish the chemical's risk could not be reduced by any other regulatory means.
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Manufacturers Urge EPA to Issue Rule Allowing More Uses for Refrigerant Chemical
May 15, 2015 | BNA Daily Environment Report
By Pat Rizzuto
Refrigerants with less global warming potential than the ones currently in use could be sold if the Environmental Protection Agency proceeds to issue a new use rule it proposed in April, according to chemical and technology manufacturers.
“Allowing use of HFO-1234yf as a refrigerant in additional applications will reduce the global warming potential of these applications by 65 percent,” Honeywell wrote in comments recently submitted regarding one of 24 chemicals covered by the significant new use rules (SNURs) the EPA proposed April 9. The agency proposed to update restrictions it previously imposed on 24 chemicals (68 DEN A-14, 4/9/15) .
Some of the new use rules the EPA proposed to revise date back to 1991.
Since it issued those new use rules, however, the agency has allowed some additional new uses of the chemicals either by approving a significant new use notification (SNUN) for a particular chemical or by not acting on a submitted notification.
Under the Toxic Substances Control Act, the EPA's failure to act within 90 days would mean the new use would be allowed.
The EPA's proposed rule would formally allow new uses the agency has either approved or allowed by not taking action.
In addition to Honeywell, DuPont and Ingersoll-Rand Plc submitted comments supporting the agency's proposed revision to a 2010 SNUR it issued for HFO-1234yf, called 1-propene, 2,3,3,3-tetrafluoro-, (CAS No. 754-12-1). Like Honeywell, Ingersoll-Rand makes air conditioning systems and other technologies.
Motor Vehicle Systems
That SNUR and a 2013 modification of it allowed HFO-1234yf's use as a refrigerant in motor vehicle air conditioning systems for new passenger cars and vehicles.
In May 2014, the EPA received a significant new use notification wanting to broaden HFO-1234yf's use in refrigerants in stationary air conditioners. The EPA allowed that use, because it took no action on the notification, the agency said in its proposed rule.
If issued as final, the proposed rule would allow companies—beyond the one that submitted the May 2014 new use notification—to use HFO-1234yf's in stationary and motor vehicle air conditioning systems.
In its proposal, EPA said it still has concerns about very high exposures to HFO-1234yf's, meaning those exceeding 1,900 parts per million, but the uses it has and would continue to allow under its proposed rule would not be expected to result in exposures that high.
Marketing New Products
In its comment, DuPont encouraged the agency to quickly finalize its proposed new use rule for HFO-1234yf.
“It will enable the production and use of refrigerants with markedly lower global warming potential than the refrigerants currently in use, resulting in reductions in greenhouse gas emissions. The more quickly this proposed SNUR modification is finalized and published the more quickly those environmental benefits will be realized,” wrote Michael Parr, a manager of regulatory advocacy at DuPont.
Ingersoll-Rand said it has two new products for which it would like to use HFO-1234yf.
“We are anxious to place our new products on the market,” wrote Nanette Lockwood, global director for climate policy at Ingersoll-Rand.
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EPA Developing Best Practices to Report Industrial Discharges of Chemicals to Utilities
May 15, 2015 | BNA Daily Environment Report
By Amena H. Saiyid
The Environmental Protection Agency plans to develop best management practices for Clean Water Act permit writers and pretreatment coordinators to report and monitor industrial discharges of hazardous chemicals to wastewater treatment plants, an agency official said May 13.
The agency also plans to clarify reporting guidelines for industrial users that discharge chemicals to wastewater utilities under pretreatment standards and to set up training sessions on conducting whole effluent toxicity tests, which are used to determine the aggregate toxic effect of all chemicals in a wastewater sample on aquatic organisms, Jan Marie Pickrel, national pretreatment team coordinator for EPA Office of Wastewater Management's Water Permits Division, said May 13. She spoke at the National Pretreatment & Pollution Prevention Workshop, which is being held in Greenville, S.C., and runs through 15.
These steps are intended to respond to a September 2014 report by the EPA Inspector General that criticized the agency for being ineffective at regulating discharges of hazardous chemicals to and from wastewater treatment plants, Pickrel said.
The inspector general said wastewater utilities weren't monitoring for hazardous chemical discharges discharged by industrial users for a variety of reasons, including the lack of awareness that dischargers were disclosing these chemicals in Toxic Release Inventory reports (189 DEN A-16, 9/30/14).
Make Utilities Aware of Releases
Pickrel said the best management practices will help ensure that writers of National Pollutant Discharge Elimination System permits and coordinators of pretreatment programs at wastewater utilities are aware of chemical releases that an industry is reporting to the national Toxics Release Inventory database.
“If there is an industry reporting TRI discharges of chemicals to your sewage plant then you should already know about it. And if you don't know about it then that should raise red flashing signals,” Pickrel said.
She emphasized the need for wastewater utilities to know the industrial users in their service area, hearkening to the industrial users survey that the EPA used to require of treatment plants. Pickrel said the EPA was committed to developing a user-friendly method that would come up with a list of toxic chemicals by just entering the NPDES permit number or the name of a utility.
Regulations at 40 C.F.R. 403.12(j) and 403.12(p) spell out reporting procedures for industrial users that discharge chemicals to treatment plants. Pickrel said the EPA would develop a fact sheet to explain that these regulations require not only identification of chemicals, but also require reporting changes in chemical processes or industries.
Aside from responding to the inspector general's critique, Pickrel said the EPA also is updating a variety of pretreatment guidance documents including a 1994 manual for industrial users to conduct inspection and sampling at treatment plants.
The National Association of Clean Water Agencies, which represents publicly owned utilities, was critical of the inspector general's report at the time of it's release.
“The EPA steps to respond to the OIG report will only reinforce what the utilities already are doing,” Cynthia Finley, NACWA director of regulatory affairs told Bloomberg BNA May 14. “Utility pretreatment programs remain responsible for regulating industries to prevent harmful pollutants from being discharged to the wastewater treatment plant.”
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EPA Superfund Cleanup Enforcement Guide Prompts Industry Concerns
May 14, 2015 | InsideEPA
By Suzanne Yohannan
Industry attorneys are expressing concern over a Superfund enforcement guidance EPA issued last month, saying the document's call for regional offices to incorporate financial assurance requirements into cleanup settlements and unilateral administrative orders (UAOs) could increase potentially responsible parties' (PRPs) costs and restrict the use of self-insurance in cleanups.
But an attorney who often represents citizens in environmental enforcement cases says the guidance does not go far enough and leaves a lot of autonomy in the regional offices.
In an April 6 memo attached to the guidance, EPA notes that financial assurance (FA) is becoming "an increasingly important part of EPA's Superfund enforcement program."
Furthermore, "[t]hese FA requirements serve the dual purpose of providing protection in the event of default by [PRPs] on their cleanup obligations (whether due to financial difficulties, recalcitrance, or otherwise) and preserving limited Superfund resources," according to a memo from EPA Office of Site Remediation Enforcement Director Cynthia L. Mackey to regional counsel and Superfund national program managers.
EPA issued the memo along with the guidance, model UAO FA and work takeover language, and sample FA mechanisms for settlements and UAOs.
"Especially given the multi-year timeline of many Superfund cleanups, FA requirements provide an invaluable safeguard against the effect of financial distress that PRPs may experience over that time period," the Guidance on Financial Assurance in Superfund Settlement Agreements and Unilateral Administrative Orders, also dated April 6, says. The FA requirements ensure that public funding sources will not bear the burden of financing the completion of Superfund cleanups, protecting limited Superfund monies while endorsing the "polluter pays" principle under the Comprehensive Environmental Response, Compensation & Liability Act (CERCLA), it says.
The emphasis on ensuring that PRPs can finance their cleanups comes as the agency is seeing an uptick in fund-lead sites, paid for by EPA appropriations, and as overall the percentage of cleanup funding by PRPs has decreased in recent years, according to a January paper, Superfund: Still Super, Still Fun, presented by EPA Region 2 Superfund director Walter Mugdan in February before an environmental law conference sponsored by the American Law Institute-Continuing Legal Education group.
The percentage of Superfund site cleanups paid for by PRPs has dropped from 70 percent down to 55-60 percent, he says in the paper. This is due to several likely reasons, such as more references from states to EPA for orphan sites, but also because more private parties are in bankruptcy or under significant financial constraints, adding to the number of orphan sites, he says.
The guidance largely references existing policies and practice, one industry attorney says, but it also indicates a greater emphasis by EPA on having liquid FA mechanisms and providing EPA with "easy access to cash in the event of a work takeover," referring to situations where EPA must take over response action work due to a PRP's failure to perform the work. This will likely increase PRPs' costs with little environmental benefit at most multi-party sites, as work takeovers are rare, the industry attorney says.
Assurance Mechanisms
Industry attorneys express concern that the guidance looks to move away from two self-insuring mechanisms PRPs often use. The guidance notes six different FA mechanisms that can be used, but tells regions to be cautious about using some of them.
A second industry attorney says the guidance raises questions about whether EPA is further restricting the ability of PRPs to use the financial test and corporate guarantee FA mechanisms -- which the source believes are commonly used. The financial test mechanism is specified criteria and reporting requirements that must be satisfied by a PRP to show an ability to pay for a cleanup, while the second mechanism is a guarantee by an affiliated entity of a PRP that shows the guarantor can meet specific financial test criteria to pay for a cleanup if the PRP fails to meet its obligations, according to the guidance.
An April 22 Environmental Law Alert online analysis by Barnes & Thornburg attorneys says these two mechanisms "are clearly discouraged and complicated by the FA guidance."
EPA in the guidance tells regions to weigh additional information when considering these two mechanisms, noting these rely on assumptions that a company's recent financial performance is a "reasonable predictor of its ability to satisfy environmental obligations," and that the financial test carries a greater likelihood of non-payment than third-party instruments.
"In general, before case teams approve the use of a financial test or corporate guarantee as FA at a site, they should appreciate the administrative burdens on the Agency that are associated with the two mechanisms, as well as the financial expertise and capabilities that are needed within the Region to analyze documentation," the guidance says. In a related footnote, it says as a result, "case teams may want to caution PRPs that utilizing the financial test or corporate guarantee may result in higher oversight billings."
The Barnes & Thornburg attorneys say in their analysis that "[c]ompanies interested in employing these mechanisms will certainly be pressed for more specific and voluminous business information to persuade USEPA case teams that they are appropriate."
Insurance Policies
The guidance also expresses caution around using insurance policies as an FA mechanism, noting the wide variation among policies and EPA's limited experience in collecting on such policies.
The three other types of FA mechanisms that the guidance says EPA typically accepts are: a trust fund, in which a PRP provides funds to a trust used to pay for a cleanup; a surety (payment or performance) bond, a contract between a PRP and an institution -- a surety -- whereby the surety agrees to pay up to a limit for cleanup work if the PRP fails to perform it; and a letter of credit, a document issued by an institution to guarantee payment of a PRP's cleanup obligations up to a limit.
The attorney who represents citizens in enforcement cases says the guidance should more strongly endorse letters of credit as a mechanism as they can be drawn on immediately and have lower transaction costs. The source adds that the guidance leaves much up to regions, which could result in many weaker FA mechanisms. The source fears the guidance jeopardizes Superfund, as it "will eat up" money that should go to "true orphan shares" rather than for responsibilities PRPs escaped from through weak Fas.
On UAOs, Mackey says in the memo that while the agency has included FA requirements in UAOs since 1990 to ensure cleanups are completed, "EPA-issued model UAOs have been silent on the use of FA funds until now." She says UAO FA funds should be transmitted to PRP-established trust funds, instead of EPA, as a way of ensuring PRPs' cleanup obligations.
PRPs in UAOs should be given a choice on which FA mechanism they will use, the memo says. "When PRPs elect to use certain FA mechanisms to satisfy their FA obligations -- namely, bonds, letters of credit, and corporate guarantees -- they will also be required to establish an unfunded 'standby' trust to receive any funds subsequently drawn from those mechanisms in accordance with the UAO," the memo says. Standby trusts are unfunded until another FA mechanism funds them, EPA explains in the guidance. If PRPs fail to comply with a UAO within a specified time frame, then EPA would request the FA providers to deposits funds into the standby trust, the memo says.
The new model UAO language also provides for EPA to assume, in a "work takeover" situation, oversight of the work using funds from the FA mechanism if the PRP violates the UAO, the Barnes & Thornburg attorneys point out in their analysis. Violations of the UAO may subject PRPs to civil penalties of $37,500 per violation per day, the model language says. The Barnes & Thornburg attorneys note in the analysis, "Financial assurance requirements for UAOs had been highly variable in the past, because of questions related to the EPA authority to require such financial assurance unilaterally and outside the context of a settlement to which the respondent agrees. It will be interesting to see how challenges to this unified approach to FA for UAOs unfold," they say.
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Homeland Security Releases Guidance For Expedited CFATS Security Plan Approval
May 15, 2015 | BNA Daily Environment Report
By Anthony Adragna
New guidance from the Department of Homeland Security will allow lower-risk facilities regulated under a program to protect the nation's industrial sites from the risks of terrorist attacks to have their site security plans approved more quickly.
The guidance, issued May 13, carries out a provision in a four-year extension of the Chemical Facility Anti-Terrorism Standards program, personally championed by former Sen. Tom Coburn (R-Okla.), to allow lower-risk facilities to move more quickly through the regulatory process.
The chemical security program requires facilities storing high levels of certain chemicals to be screened for participation in CFATS. The Department of Homeland Security then assigns qualifying facilities to a risk-based tier ranging from 1 to 4 with Tier 1 considered most vulnerable.
Facilities then must submit a site security plan to the department for review and approval. Under the accelerated approval procedures, the department would have 100 days after a site security plan's submission to act.
Participation in the new expedited procedures will be voluntary, but only facilities in Tiers 3 and 4—the lowest risk levels—are eligible to participate. The guidance takes effect June 16.
President Barack Obama signed the four-year extension (Pub. L. No. 113-254) of the CFATS program in December. The bill contained language requiring the Department of Homeland Security to issue guidance on expedited processing (244 DEN A-3, 12/19/14).
Companies such as Dow Chemical Co., BASF SE, Exxon Mobil Corp. and DuPont are regulated under the program. The types of facilities regulated under the program are as varied as chemical manufacturers, hospitals, dry cleaners, warehouses and universities.
Sites May Self-Certify
If a facility elects to participate in the accelerated approval program, it would certify under penalty of perjury that it has met all the risk-based performance standards for ensuring the site's security against terrorist attacks.
The Department of Homeland Security would not immediately verify a facility's compliance with the regulations, but a company would face potential enforcement action if it was found to be out of compliance at a later date.
The guidance indicated the department would conduct inspections and audits to ensure facilities were complying with applicable regulations.
Also included in the guidance document is a template for companies and individual sites to follow when submitting paperwork for the accelerated review procedures.
The document explicitly names various security measures that would be sufficient to meet requirements under the CFATS regulatory program for Tier 3 and Tier 4 facilities.
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Explicit Fracking Ban Expected to Follow New York's Environmental Impact Statement
May 15, 2015 | BNA Daily Environment Report
By Gerald B. Silverman
While New York state's long-awaited environmental impact statement (EIS) on fracking doesn't explicitly ban the natural gas drilling practice, sources on both sides of the issue told Bloomberg BNA that there's no doubt an official ban will be put in place when the state environmental conservation commissioner issues a “findings statement.”
The voluminous EIS released by the Department of Environmental Conservation May 13 “lays out the scientific, technical and policy rationale for the ultimate determination not to permit high-volume hydraulic fracturing to proceed in the state,” Kate Sinding, senior attorney for the Natural Resources Defense Council, told Bloomberg BNA in an e-mail message (93 DEN A-1, 5/14/15).
“Yes, we are absolutely confident the Cuomo administration is banning fracking through the SEQRA [State Environmental Quality Review Act] process,” she said. “We have no doubt that the [final supplemental generic environmental impact statement] sets the stage for as ‘permanent’ a ban as could be legally effectuated short of a constitutional amendment.”
Under state regulatory procedures, the EIS, which is formally called a final supplemental generic environmental impact statement (FSGEIS), will be followed in no less than 10 days by a findings statement from state Environmental Conservation Commissioner Joseph Martens.
Thomas Mailey, a spokesman for DEC, told Bloomberg BNA May 13 that he couldn't say if the findings statement would contain an explicit fracking ban.
“Ultimately, the ban itself will be memorialized in the so-called findings statement, which is to be issued no less than 10 days from issuance of the FSGEIS,” Sinding said.
Will Show Required Analyses Undertaken
“That document will set forth the determination to ban fracking, as well as demonstrating that the decision is the result of the agency undertaking the legally required analyses and making the requisite findings,” she said.
Sinding said the EIS “contains what is legally required to sustain a determination to ban fracking, and it would be legally extraordinarily difficult to defeat.”
Scott R. Kurkoski, an attorney for pro-fracking landowners with the Binghamton, N.Y., firm Levene, Gouldin & Thompson LLP, told Bloomberg BNA “this will clearly be a ban in the final findings statement.”
Thomas S. West of the West Firm PLLC, an attorney for the oil and gas industry, told Bloomberg BNA that “the findings statement will be the place where there will be specificity concerning the extent of the ban and its duration.”
New York has had an effective moratorium in place on fracking for a number of years, and the state's highest court has ruled that local governments have authority to prohibit the practice.
‘Significant Uncertainty' Cited
The executive summary of the EIS, which contains some 28 volumes, said studies and experts have found that “significant uncertainty remains regarding the level of risk to public health and the environment that would result from permitting high-volume hydraulic fracturing in New York, and regarding the degree of effectiveness of proposed mitigation measures.”
“In fact,” it said, “the uncertainty regarding the potential significant adverse environmental and public health impacts has been growing over time.”
“The Department concurs with [the New York State Department of Health], as the uncertainty revolving around potential public health impacts stems from many of the significant adverse environmental risks identified in the SGEIS for which the Department proposed and considered extensive mitigation measures,” the EIS said.
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Obama Defends Arctic Drilling Decision
May 14, 2015 | The Hill - E2 Wire
By Timothy Cama
President Obama on Thursday defended his administration’s decision to allow offshore oil and natural gas drilling in the Arctic Ocean, a move that has been the subject of criticism from environmentalists.
Obama told reporters that although he wants the country to move completely away from fossil fuels at some point, domestic oil and natural gas production is still necessary in the short term.“I believe that we are going to have to transition off of fossil fuels as a planet in order to prevent climate change,” Obama said at a press conference at Camp David during his meeting with Middle Eastern delegates on defense, security and other topics.
“I think it is important to also recognize that this is going to be a transition process,” he said. “In the meantime, we are going to continue to use fossil fuels, and when it can be done safely, and appropriately, U.S. production of oil and natural gas is important.”
Obama said he’d rather get the oil and gas domestically, “with all the safeguards and standards that we have,” than import it from countries with worse environmental standards.
Obama’s decision Monday to approve Shell’s drilling plan for this summer brought extremely negative responses from environmentalists, who said it is nearly impossible to drill in the Arctic safely. The critics asserted that Shell’s botched 2012 drilling attempt was evidence of these problems.
Greens also complained that the oil and gas produced would exacerbate climate change. Environmental activist and 350.org founder Bill McKibben accused Obama in a New York Times opinion piece of denying climate change science.
On the safety front, Obama said the Deepwater Horizon oil spill in 2010 at BP’s Gulf of Mexico well made him mindful of the dangers of offshore drilling. As a consequence, Shell is being held to extremely high standards for the drilling it’s planning northwest of Alaska in the Chukchi Sea, he asserted.
“Based on those very high standards, Shell had to go back to the drawing board, revamp its approach and the experts at this point have concluded that they have met those standards,” he said.
Shell still has some minor federal approvals to obtain, but it plans to drill up to six exploratory wells starting this summer.
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Murkowski Says It ‘Makes Sense' to Have Oil Export Bill in Broader Energy Package
May 15, 2015 | BNA Daily Environment Report
By Ari Natter
The chairman of the Senate Energy and Natural Resources Committee said May 14 that she is inclined to include standalone legislation that would end the 40-year ban on the export of domestic crude oil as part of a broader energy package the committee is drafting.
“I'd like to have it in there,” Sen. Lisa Murkowski (R-Alaska) told reporters. “It just makes sense in there, as part of the bigger, broader energy updating our architecture.”
The bill, the Energy Supply and Distribution Act of 2015 (S. 1312), released May 13, is scheduled to be the subject of a June 4 hearing on “energy accountability and reform,” along with other bills that could end up in the broader energy package, which is expected to be unveiled later this summer.
In addition, Sen. Heidi Heitkamp (D-N.D.) is expected to introduce a separate standalone bill repealing the crude oil export ban to be considered by the Senate Banking Committee, Murkowski said.
Heitkamp, the lone Democratic co-sponsor of S. 1312 along with 11 Republican senators, is a member of the Banking Committee, which has jurisdiction over export controls and foreign trade promotion.
Her legislation will be combined with S. 1312 “to make sure our legislation to lift the ban is as strong and comprehensive as possible,” Heitkamp said in a statement.
We're “just making sure we are covering all of our bases,” Murkowski said, adding that she plans to co-sponsor Heitkamp's bill.
Robert Dillon, a spokesman for Murkowski and other Republicans on the committee, said a final decision on whether to include S. 1312 in the broader energy package is expected after markups begin in June.
Prohibition Called ‘Mind-Boggling.'
Murkowski's legislation is supported by companies that include ConocoPhillips, Hess Corp. and Marathon Petroleum Corp. and opposed by refiners such as Alon USA, Monroe Energy, PBF Energy and Philadelphia Energy Solutions.
The legislation, which would authorize exports of all crude oil and condensate produced in the U.S. without a federal license, comes amid surging U.S. production of crude oil due to the advent of horizontal drilling and hydraulic fracturing.
“The whole idea that oil exports would still be prohibited is mind-boggling,” Murkowski said at a May 14 forum held at the Center for a New American Security.
While the export of refined petroleum products such as gasoline and diesel fuel are allowed, energy law enacted in 1975 following the Arab oil embargo barred the export of crude oil except in limited cases, such as exports to Canada.
“The time is now,” Murkowski said on the Senate floor. “Study after study has shown this will not raise our gasoline prices.”
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House Lawmakers Slam White House For Pipeline Delay
May 15, 2015 | E&E News PM
By Daniel Bush
Approving the Keystone XL pipeline and lifting the decades-old ban on crude oil exports would boost domestic energy security and increase fossil fuel production in neighboring countries, several House lawmakers said yesterday.
Members of the House Foreign Affairs Subcommittee on the Western Hemisphere slammed the White House for energy policies that they said have stymied oil and gas development from Canada to South America.
Chairman Jeff Duncan (R-S.C.) pointed to Keystone XL, saying the proposed pipeline from Canada to Gulf Coast refineries would strengthen regional energy security and create thousands of jobs.
It's "shameful" that KXL's approval process has dragged on for more than six years, Duncan said at a hearing. "The Keystone XL decision remains mired in White House delay tactics," he added.
Rep. Albio Sires of New Jersey, the subpanel's top Democrat, also urged the administration to approve the project. Earlier this year, President Obama vetoed a Senate bill aimed at jump-starting the pipeline, saying that he would wait to make a final decision until the State Department completes a review of the project.
KXL isn't the only tool policymakers have to boost oil and gas production across the Americas, Duncan said.
The domestic crude export ban and restrictions on offshore drilling along the Atlantic Coast and in the Caribbean have also slowed energy development and trade in the region, Duncan said.
The United States has "neglected countries in this region for way too long. We're trying to get re-engaged," Duncan said, adding, "energy is a segue toward that re-engagement because energy is a win-win for everybody."
Duncan has been a longtime supporter of energy development in the region.
In 2013, he co-sponsored legislation to implement the U.S.-Mexico Transboundary Hydrocarbon Reservoirs Agreement, a deal to help the two nations coordinate energy development along their maritime border. Obama later signed the bill into law as part of a broader budget deal.
While KXL's fate remains uncertain, there has been some movement in Congress toward lifting the 1970s-era crude export ban. Earlier this week, Senate Energy and Natural Resources Chairwoman Lisa Murkowski (R-Alaska) introduced a bill to lift the export ban (Greenwire, May 13).
The proposal drew more than a dozen GOP co-sponsors and one Democrat, Sen. Heidi Heitkamp (D-N.D.). House lawmakers have also floated legislation to lift the 40-year-old ban.
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Conflict of Interest Reported in Study on Drilling Fluids Likely Link to Water Pollution
May 15, 2015 | BNA Daily Environment Report
By Tripp Baltz
The Proceedings of the National Academy of Sciences has issued an apology for confusion over two different conflict-of-interest statements connected with a recent study that found drilling fluids likely leaked into drinking water wells in Pennsylvania.
When the PNAS first received the paper, “Evaluating a groundwater supply contamination incident attributed to Marcellus Shale gas development,” it had no conflict-of-interest statement, the journal said May 14.
When the authors returned their proofs, they added a conflict-of-interest statement for the first author, Garth T. Llewellyn, principal hydrogeologist with Appalachia Hydrogeologic and Environmental Consulting LLC in Bridgewater, N.J.
Released May 4, the PNAS report said natural gas and other contaminants likely derived from drilling or hydraulic fracturing affected a drinking water aquifer in 2011 in Bradford County, Pa. The contaminants were detected using instrumentation not available in most commercial laboratories, according to the study (87 DEN A-13, 5/6/15).
Nearby gas wells, the report said, caused “inundation of natural gas and foam in initially potable groundwater used by several households.” The homeowners filed a civil lawsuit against the operator of the wells, Chesapeake Energy Corp., which they settled in June 2012.
Litigation Support
In the conflict-of-interest statement that accompanied the main report, Llewellyn and his firm were identified as having provided litigation support and environmental consulting services to the impacted households. An embargoed version released earlier didn't include that statement.
The PNAS said embargoed versions of papers it prepares in advance typically don't include author corrections to proofs.
“We apologize for the confusion regarding the conflict-of-interest statement for the PNAS article,” it said. “We regret that our process did not relay this conflict-of-interest information to the media.”
Llewellyn and his firm “missed” the conflict-of-interest form field when making out the original manuscript submission, which was “our fault,” he told Bloomberg BNA May 14. “This wasn't intentional, and we corrected it upon receiving the proof.”
Daniel Markind of Weir & Partners LLP in Philadelphia, an oil and gas and real estate practitioner, told Bloomberg BNA May 14 that “whatever power the paper may have had was diminished when it was determined” Llewellyn had provided litigation support to the landowners suing Chesapeake.
Llewellyn said his consulting for the homeowners didn't have any bearing on the findings of the study.
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Pennsylvania Lawmakers' Tax Proposals Would Tap Into Marcellus Shale Resources
May 15, 2015 | BNA Daily Environment Report
By Leslie A. Pappas
With Marcellus Shale deposits now pumping out more than a third of the shale gas produced in the United States, Pennsylvania lawmakers are hoping to stake a claim on the state's natural gas production by introducing severance tax proposals to mine their state's new natural resource riches.
“People have said Pennsylvania is the Saudi Arabia of natural gas,” Rep. Kate Harper (R), a sponsor of one of the many severance tax proposals, said in a May 8 podcast posted on the Pennsylvania House Republican Caucus website.
“I'm not trying to drive the industry out of the state,” she said, “but I do think they can pay a little more.”
Lawmakers have proposed a wide variety of severance taxes on natural gas that would be used to pay for education, pensions, low-income heating programs and environmental programs, among other things.
All the proposals differ in some way from Gov. Tom Wolf's (D) severance tax proposal, which would eliminate the existing impact fee and replace it with a 5 percent severance tax, plus 4.7 cents per thousand cubic feet, on natural gas extraction.
Bills Introduced
All of the bills introduced so far have been referred to the Environmental Resources and Energy Committee in their respective chambers:
• Wolf's proposal, the Pennsylvania Education Reinvestment Act, has been introduced as H.B. 1142 by Rep. Margo Davidson (D). It was referred to committee May 12.
• H.B. 500, sponsored by Rep. Madeleine Dean (D), would reintroduce legislation to enact a 4 percent hybrid severance tax divided between the value and the volume of natural gas extraction. The tax would be on top of the existing impact fee and would bring Pennsylvania's effective rate to 5.9 percent, according to a memorandum accompanying the bill. It was referred to committee March 4.
• H.B. 528, sponsored by Rep. Scott Conklin (D), seeks a 10-cent severance tax on each 1,000 cubic feet (Mcf) of natural gas extracted. The $300 million in annual revenue would be dedicated to the federal Low-Income Home Energy Assistance Program. The bill was referred to committee Feb. 23.
• H.B. 82, sponsored by Rep. Kate Harper (R), would assess a tax of 3.5 percent of the gross value of units severed at the wellhead and would leave the impact fee unchanged. New revenue would go toward reducing unfunded liabilities in the Public School Employees' Retirement Fund, which has an unfunded liability exceeding $32 billion. The bill was referred to committee Jan. 21.
• S.B. 415, sponsored by Sen. Arthur Haywood III (D), proposes an 8 percent extraction tax on Marcellus Shale production. Off the top, $100 million of the revenue would go to the Growing Greener program and then 60 percent of the remainder would go toward funding public schools and 40 percent would be used to help reduce Pennsylvania's unfunded pension liabilities, according to Haywood's memo. The bill was referred to committee April 6.
• S.B. 519, sponsored by Sen. Thomas McGarrigle (R), was formerly known as S.B. 1349 (2013). It would impose a 4 percent tax on the gross value of the natural gas severed at the wellhead, and revenue would be dedicated entirely to funding public education. The bill was referred to committee Feb. 19.
• S.B. 395, sponsored by Sen. Jim Brewster (D), calls for a 5 percent severance tax on the natural gas extracted at the wellhead; all revenue would be placed in a special fund to be used for education. The bill was referred to committee Feb. 5.
The Senate will reconvene June 1, when budget talks are expected to resume.
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Oil lobby launches ads against EPA ozone rule
May 14, 2015 | The Hill - E2 Wire
By Timothy Cama
The oil industry is launching a multimedia advertising campaign tomorrow in opposition to the Obama administration’s attempt to restrict allowable concentrations of ozone pollution.
The campaign from the American Petroleum Institute (API) reinforces the industry’s belief that the current ozone standards, set in 2008, are sufficient to protect public health.
The ads will appear in print, radio, TV and the Web starting Friday, the API said.
The battle over ozone is a high-stakes fight for oil and other industries that produce or use fossil fuels. Ozone, the main component of smog, is a byproduct of pollutants from fossil fuels, and the industry fears states would curb fossil fuel use in order to comply.
“Even as we drive more, use more energy and grow our economy, air pollution is dropping. Ozone levels are down 18 percent,” a voiceover in the TV ad says. “But bureaucrats want to change the current rules safeguarding public health.”
The ad cites a controversial industry conclusion that the Environmental Protection Agency’s ozone proposal would be the most expensive regulation ever, and calls it unnecessary.
“Don’t mess with success,” the oil group’s ad says. “Keep the current strict ozone standards.”
The EPA proposed in November to reduce the allowable ozone level to between 65 and 70 parts per billion, down from the current 75 parts per billion.
The agency and its supporters say reducing smog would improve public health because ozone contributes to respiratory illnesses.
A study commissioned by the National Association of Manufacturers, which the API cited, estimated that the rule could cost up to $1.1 trillion for compliance. The EPA, in contrast, says it would cost up to $16.6 billion, and the benefits could reach $38 billion.
Howard Feldman, API’s senior director of regulatory affairs, said the cost of the ad buy will be “significant.”
API spokesman Carlton Carroll said the ads will focus on the Washington, D.C., area, in order to influence the Obama administration. He declined to be more specific in the campaign’s cost and said it has no end date in mind for it.
The EPA plans to make a final determination on potential ozone changes by Oct. 1, a date it agreed to in a court settlement.
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API Launches Ads Hitting EPA’s Ozone Proposal
May 14, 2015 | PoliticoPro
By Alex Guillén
The American Petroleum Institute is launching a new ad campaign against EPA’s proposal to tighten ozone standards.
“We think it’s important to get the ads out there to let people know how important this issue is,” Howard Feldman, API’s director of regulatory and scientific affairs, told reporters. The ozone rule is “flying under the radar right now for some reason that we don’t really understand.”
The administration is considering lowering the standard from the George W. Bush-era 75 parts per billion to between 65 and 70 ppb.
The campaign includes a TV commercial featuring EPA figures showing that ozone emissions are down 18 percent since 2000 and calling the new rule "unnecessary" and "potentially the most expensive ever."
API’s campaign also includes a one-minute radio spot as well as print and online ads. All of the ads will run in the Beltway starting Friday and continue until the ozone rule is finalized. EPA is under court order to finalize a rule by Oct. 1.
EPA’s proposal would bring little to no health benefit while costing the economy hundreds of billions, Feldman said.
EPA estimates that a reduction to 70 ppb would bring health benefits ranging from $7.5 billion to $15 billion after 2025, while a 65 ppb standard would have benefits ranging from $21.2 billion to $42.1 billion.
API declined to say how much it will spend on the campaign.
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Manchin, Heitkamp Promote 5 Bills For Broad Energy Package
May 15, 2015 | E&E Daily News
By Manuel Quiñones
Sens. Joe Manchin of West Virginia and Heidi Heitkamp of North Dakota are hoping a new package of bills aimed at boosting coal's fortunes finds its way into a broader energy package.
The Democrats introduced the five measures this week and promised to find a viable path for coal amid concerns about carbon emissions.
"It's time for both sides of the debate about coal to get on board with the fact that coal is a reliable and redundant resource that we should continue to use, and by doing so, it helps reduce electricity costs for all of us," Heitkamp said in a statement.
"But we can do it in a way that is cleaner and more efficient, that's where the bills Senator Manchin and I offered come in."
Their bills: S. 1293 would tap the Department of Energy as the official coordinator of federal projects designed to make coal cleaner, including necessary permits usually handled by other agencies. S. 1283 would officially establish a clean coal technology program, and would authorize $610 million for fiscal 2017 through 2020 and $560 million for fiscal 2021. S. 1282 would task DOE with prioritizing research concerning carbon capture, sequestration and utilization from fossil fuel power plants. S. 1306 would require DOE to study an $8 billion fossil fuel loan guarantee program that has yet to support any projects. S. 1285 would allow DOE to promote price guarantees for power plants that trap and sell their carbon emissions. The goal is to help make those projects commercially viable.
Coal interests have been more focused on legislation to push back on the Obama administration's environmental agenda, particularly U.S. EPA's proposed carbon limits for existing power plants.
But advocates of carbon capture technology for coal-fired power hope to grab more attention on Capitol Hill. And they favor bundling Heitkamp's and Manchin's measures into an energy reform package (E&E Daily, May 13).
At least some new bills will be discussed at a Senate Energy and Natural Resources Committee hearing next week on energy supply issues. The hearing is part of the energy overhaul deployment process.
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Hearing Illustrates Balancing Acts Energy Bill Writers Face
May 15, 2015 | E&E Daily News
By Nick Juliano
Several points of tension emerged yesterday as senators considered how best to address the nation's energy infrastructure needs, including the balance of state and federal decisionmaking authority, the role of distributed generation in providing reliable energy and the extent to which utilities should be required to purchase renewable power.
A hearing before the Energy and Natural Resources Committee homed in on some of the key considerations Chairwoman Lisa Murkowski (R-Alaska) and her colleagues will have to balance as they try to craft the first bipartisan, comprehensive energy bill to be considered in years. The hearing was called to consider nearly two dozen proposed energy infrastructure bills proposing various approaches to compensating owners of rooftop solar panels, siting new gas pipelines and electric transmission wires, and updating decades-old laws governing utilities, among other issues. Distributed generation
Two senators from opposite sides of the aisle demonstrated an interest in resolving the existing tension between utilities and rooftop solar providers that has intensified in several states as photovoltaic panels have spread in recent years -- but their sympathies seem to align with opposite sides of the fight.
Maine Sen. Angus King, an independent who caucuses with Democrats, touted S. 1213, his bill establishing parameters for states to consider when setting net-metering rates. King said rates should account for the benefits that sources such as rooftop solar panels provide and said utilities should give homeowners a "just and reasonable" payment for the electricity they sell back to the grid. The bill, he said, was meant to avoid "little brush-fire wars in all 50 states" as rooftop solar and related technologies inevitably spread.
Murkowski has introduced a less prescriptive net-metering bill, S. 1219, which calls for studies of net metering policies with an emphasis on the costs borne by utilities and ratepayers without rooftop solar panels to maintain integrity of the electric grid.
For King, promoting rooftop solar is a "sovereignty issue" that recognizes "people have a right to generate their own electricity," he said during the hearing. Murkowski, on the other hand, asked, "How can we accomplish this in the most affordable way to customers ... and keep it reliable, as well?"
A utility witness said the issue should not be considered a referendum on support for renewable energy overall.
"The issue of rooftop solar has led to extreme rhetoric on all sides, but the issue is not pro-solar or anti-solar," said Jonathan Weisgall, vice president for legislative and regulatory affairs at Berkshire Hathaway Energy, pointing to overarching concerns with cost-effectiveness and fairness to all customers. "The utility should be agnostic" about whether customers generate their own power, he said.
In a brief interview later in the day, Murkowski said she needed to study King's proposal more closely, but she agreed that they shared the goal of properly managing the transition underway in the power sector.
"It's all toward the bigger picture, which is how do you fairly do this integration?" Murkowski told E&E Daily. "And quite frankly, we shouldn't get fixated on rooftop solar, because next year it might be something else that's out there that's putting power into the grid. So how do we accommodate for it and do it fairly and equitably for everybody out there? That's our big task." Pipelines
The committee also considered various proposals meant to ease construction of pipelines. Among them were S. 411, from Sen. John Barrasso (R-Wyo.), and S. 1196 from Sen. Bill Cassidy (R-La.), both of which would make it easier to build pipelines in national parks and across federal land.
Barrasso's bill targets gathering lines to collect gas that is often vented or flared from oil wells in states like North Dakota.
"Over the last five years, we have seen significant amounts of natural gas vented and flared in states like North Dakota while New England continues to experience a shortage of natural gas -- and this has resulted in some of the highest energy prices in the country," Barrasso noted at the hearing.
Among other measures, they would eliminate a requirement for Congress to provide case-by-case authorizations for pipeline construction through national parks, drawing opposition from the National Parks Conservation Association and other groups that outlined their objections in a letter to committee members before the hearing.
"The continued success of the national park idea depends upon careful stewardship of their resources," the groups wrote. "Oil and natural gas pipelines are examples of a utility that could cause an unreasonable impairment to a national park unit."
Other pipeline bills that won support from industry witnesses yesterday were S. 1228, a cross-border pipeline bill from Sen. John Hoeven (R-N.D.), and S. 1210, Sen. Shelly Moore Capito's (R-W.Va.) bill meant to streamline pipeline permitting.
Capito's bill would set a deadline on agencies responsible for permitting pipelines but eliminates a mandatory approval clause that generated a veto threat in another pipeline bill that passed the House earlier this year. Hoeven's bill was unchanged compared to an earlier version that has prompted a veto threat (E&E Daily, May 7). PURPA
Senators focused intently on the Public Utilities Regulatory Act (PURPA), the 1978 law that set in motion numerous reforms to establish electricity markets, reduce energy use and promote alternative sources of supply, such as renewable energy and cogeneration.
Sen. James Risch (R-Idaho) took aim at PURPA's requirement for utilities to buy power from cogeneration or small renewable energy facilities in certain instances. His bill, S. 1037, would allow utilities to avoid the "mandatory purchase obligation" if their state regulators determined there was no demand for additional power. He said the obligation provides additional subsidy for renewable energy projects that already receive tax credits and forces utility customers to pay above-market rates for power they do not need.
Weisgall, of Berkshire Hathaway, backed the idea and suggested that Risch go even further.
Weisgall's testimony included proposed legislative language that would spare utilities from the purchase obligation if they participated in energy imbalance markets, which he said would provide a driver to get additional cost-effective renewable energy onto the grid. He pointed to an existing imbalance market operated by the California Independent System Operator that includes utilities in Nevada and Washington state and has won plaudits from the Natural Resources Defense Council and American Wind Energy Association, among others.
That proposal did not sit well with ENR Committee ranking member Maria Cantwell (D-Wash.), who was instrumental in investigating market manipulation by Enron and its consequences in California and the Pacific Northwest. Cantwell pointed out that the imbalance market in California, which launched in November, is being investigated by FERC following a series of price spikes (EnergyWire, March 18).
"I can tell you one big group that doesn't support it, and it's the Pacific Northwest. So the Pacific Northwest is not going to support another cooked-up scheme from California ISO about energy markets, OK?" she said. "We're not getting screwed over again by another Enron-style 'Look over here, don't pay attention to what's really going on over here.'"
Cantwell is pursuing her own proposal to modernize the electric grid, including some modifications to PURPA. The "Grid Modernization Act," S. 1243, would add to the 1978 law a new "resilience" standard requiring utilities and states to consider the ability to adapt to changing conditions and recover from disruptions in future investments. It also would promote smart grid demonstration programs and energy storage research, among other aspects.
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Study Maps Hundreds Of Methane Gas Leaks Under Streets In L.A. Region
May 14, 2015 | LA Times
By Tony Barboza
An environmental group has identified nearly 250 locations where planet-warming methane is leaking from natural gas lines under streets in the Greater Los Angeles region.
Environmental Defense Fund researchers outfitted a Google Street View mapping car with real-time air monitoring equipment that can detect elevated levels of methane, the main component of natural gas. Starting in August, they drove the vehicle over more than 1,000 miles of roadways in Chino, Inglewood and Pasadena.
After analyzing the data in collaboration with scientists from Colorado State University, the researchers plotted the leaks and their relative size on an interactive map and reported the results to Southern California Gas Co., which serves millions of customers in Central and Southern California.
"These leaks are all over the place: In our neighborhoods and under our cities," Tim O’Connor, who directs the Environmental Defense Fund's California Climate Initiative, said in releasing the map Thursday.
Such leaks do not pose a threat to public safety, but are important to repair because they fuel global warming, he said.
Methane is a potent greenhouse gas that traps heat in the atmosphere. Experts say that clamping down on methane leaks will be crucial to meeting Gov. Jerry Brown’s aggressive goal of slashing greenhouse gas emissions 40% below 1990 levels by the year 2030.
The environmental group’s effort is the latest in a series of mapping projects in six U.S. cities, including Boston and Indianapolis. The Environmental Defense Fund plans to conduct additional methane mapping this summer in Orange.
Southern California Gas Co. on Thursday released its own interactive map of leaks the company has detected on its system but deemed to be non-hazardous. That map can be searched by ZIP Code and shows whether a pipeline leak is being monitored or is scheduled for repair.
Typically, leaks are considered non-hazardous if they are far from an ignition source and away from structures where gas could build up to dangerous concentrations.
Deanna Haines, director of gas engineering for the company, said utilities focus their efforts on repairing leaks that threaten public safety. But that is changing as the industry faces more scrutiny over its greenhouse gas emissions.
"This will help raise awareness that we need to get funding to go after these environmental-related emissions," Haines said.
Southern California Gas officials said they conduct leak surveys every one to five years.
According to Haines, the company replaced its oldest, cast-iron pipelines decades ago. Although about half the region’s distribution system has upgraded to plastic pipe, a fair amount of unprotected steel pipe remains and must be replaced to reduce leaks.
In November, Southern California Gas requested approval from the California Public Utilities Commission to use more than $6 million from ratepayers to accelerate pipeline replacement and leak repairs through 2018.
The utility was not involved in collecting data for the Environmental Defense Fund project, but had the opportunity to review and respond to the group's findings before they were released, O’Connor said.
Southern California Gas technicians went to locations where the Environmental Defense Fund reported leaks to conduct their own measurements. The company found that 40% to 50% of the methane detected by the researchers did not correlate to actual leaks in the system and may have been the result of methane from other sources, including natural seeps or field gas.
But the group’s analysis, Haines said, did identify some leaks Southern California Gas was unaware of -- including a few in Pasadena and Chino that had to be repaired immediately.
Under a new state law, the California Public Utilities Commission is charged with adopting rules and procedures to minimize methane leakage from natural gas infrastructure that is contributing to global warming.
Gas utilities are required by Friday to file a report about their natural gas leaks how they manage them.
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CEQ Suggests Dropping Disputed 'Upstream/Downstream' Plan In GHG Guide
May 14, 2015 | InsideEPA
By Dawn Reeves
The White House Council on Environmental Quality (CEQ) is hinting that it could drop language from its draft National Environmental Policy Act (NEPA) guidance urging federal agencies to consider upstream and downstream greenhouse gas (GHG) impacts of projects, a move that would undercut advocates' efforts to force such reviews.
Christy Goldfuss, CEQ's managing director, told a House Natural Resources Committee hearing May 13 that the council has heard more concerns about the guide's recommendation that upstream and downstream GHG emissions be considered than any other issue, and that it is CEQ's intent to focus the guide on major NEPA tenets which address direct, indirect and cumulative impacts, and “not be speculative . . . we don't want to add confusion to what exists already.”
Goldfuss' comments came in response to questions by Rep. Raul Grijalva (D-AZ), the committee's ranking Democrat, who referred to comments by Ray Clark, a former Army official now working as a consultant, who suggested the upstream/downstream language went beyond the scope of NEPA and its implementing regulations.
At the end of the hearing, Goldfuss also confirmed to committee Chairman Rob Bishop (R-UT) that CEQ would be clarifying the issue.
CEQ's draft guidance, issued late last year, generally recommends that agencies consider potential upstream and downstream GHG impacts when reviewing proposed projects. “Emissions from activities that have a reasonably close causal relationship to the federal action, such as those that may occur as a predicate for the agency action (often referred to as upstream emissions) and as a consequence of the agency action (often referred to as downstream emissions) should be accounted for in the NEPA analysis,” CEQ's draft says.
It also gives the example of preparing a NEPA analysis for a proposed open pit mine that “could include the reasonably foreseeable effects of various components of the mining process, such as clearing land for the extraction, building access roads, transporting the extracted resource, refining or processing the resource, and using the resource.”
While the guidance is not yet final, advocates have already sought to require federal agencies to consider such impacts. For example, environmentalists are challenging a series of decisions by the Federal Energy Regulatory Commission (FERC) to approve natural gas infrastructure projects, arguing the commission should consider upstream releases of methane, a potent GHG, before approving the projects.
Like Goldfuss, FERC argued in its first substantive brief defending its approval that it has discretion not to review what it considers to be “speculative” upstream and downstream impacts of GHG emissions associated with its approval of a liquified natural gas export terminal in Texas.
Even before she responded to Grijalva, Goldfuss indicated in her prepared testimony that CEQ was placing limits on the extent to which agencies should consider upstream and downstream GHGs. Citing the example of an infrastructure project, she wrote that the guidance in its draft form recommends an agency could consider the emissions from the reasonably foreseeable amounts of construction materials, construction equipment used . . . and operations over the facility's projected life,” her testimony said.
But it added, “The disposition of the facility after that point would typically be speculative and therefore should not be included in the analysis. The agency would typically not analyze the emissions associated with the widgets produced (for example: vehicles, solar panels, tons of coal, gallons of gas, board feet of timber) unless there are reasonably foreseeable quantities -- any attempt at speculation could be mistaken as valid and lead to misinformed decisions.”
Industry Criticism
Many industry officials are also strongly criticizing the draft guidance's provision. Roger Martella, a former EPA general counsel who now represents major industry groups, testified at the House hearing that CEQ should drop the upstream/downstream language in the guide because the requirement to consider those impacts is too broad and goes beyond existing rules that agencies consider direct, indirect and cumulative effects.
“Without appropriate limits in place, the scope of a NEPA review could become boundless and preclude any meaningful comparison between alternatives,” his testimony said. “CEQ must ensure that agencies avoid any temptation to expand the scope of the NEPA review to include other upstream or downstream GHG emissions that lack the requisite causal connection to the proposed action” and that it must “ensure that a NEPA discussion of GHG emissions provides pertinent and helpful information to an agency decision maker rather than simply adding fuel to an ongoing debate about climate change.”
The limits “ensure that agencies will not consider potential environmental effects over which the agency has no control and allows them to avoid unnecessary litigation over hypothetical, tangential or de minimis impacts,” Martella added in his testimony.
Martella's testimony said the example of the mine that CEQ included in the draft guidance “strain[s] the concept of proximate cause and could encourage agencies to look too far in their NEPA reviews and project challengers to cite the guidance in litigation when the agencies stay within proper bounds. CEQ should clarify that nothing about GHGs or climate change alters the limits established in the regulations and caselaw, and that an expanded upstream and downstream assessment for GHGs is neither required nor lawful.”
During the hearing Martella warned that the guide goes far beyond the CEQ regulations and noted that rules cannot be amended with a guidance.
He also urged CEQ to withdraw the guidance while it is addressing these issues because he said the draft guide has the de facto impact of being in effect, and that can prompt litigation now where courts would look to the draft for direction. “Anything CEQ does [is] effectively binding the day it comes out,” he said.
One source who is supportive of the draft guidance says the upstream/downstream issue “is especially controversial” but adds, “Not all upstream and downstream impacts are speculative. If you're building a coal mine, there is no doubt that the coal will be burned to make electricity and that [GHGs] will be emitted in the process -- nothing speculative about that. Officials deciding whether to authorize the mine should be given full information about the consequences of that decision.”
Another source who opposes the upstream/downstream language in the guide expects it to be dropped from the final version. Goldfuss' testimony “seems to walk away from the downstream/upstream analysis they required in the guidance. She hinted at that further several times during the hearing and seemed to confirm it at the end.”
Goldfuss and Clark also said they thought the guide would result in less NEPA litigation, while Martella said the guide would increase lawsuits.
Goldfuss said the guidance will “put an end to delays for hand wringing over whether climate change should be addressed or how to address it. Our guidance provides a consistent framework for how agencies can consider the climate to inform decisionmakers and the public.” She added that 27 court decisions have held that climate must be addressed in NEPA reviews, and that agencies have asked CEQ for the guide to know how they should consistently address GHGs in NEPA reviews.
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McCarthy Asks Businesses to Speak Up On Economics of Climate Change Action
May 15, 2015 | BNA Daily Environment Report
By Andrea Vittorio
Environmental Protection Agency Administrator Gina McCarthy is urging businesses to keep touting the economic benefits of acting on climate change.
“The business community can speak to people in ways that EPA cannot,” McCarthy said May 14 at the 2015 Ceres conference in San Francisco. “People trust businesses to speak about economics.”
“Believe me, when you say as a group, and you have, so many of you, that climate change is a challenge, but it also represents a huge economic opportunity, it speaks volumes for the efforts that we are taking.” she told the audience of sustainability-minded businesses, investors and nongovernmental organizations.
The EPA is working on the first regulations (RIN 2060-AR33) to cut carbon pollution from the nation's power plants, which McCarthy said are on track to be finalized this summer (48 DEN A-5, 3/12/15).
She also thanked the Ceres audience for signing onto a letter saying they supported the EPA's Clean Power Plan, as the power plant regulations are called. The letter, signed by more than 200 companies, said, “Our support is firmly grounded in economic reality.”
Billion-Dollar Opportunity
For Bank of America Merrill Lynch, clean energy and climate change represent billions of dollars in potential capital.
Ray Wood, managing director and head of U.S. power and renewables at Bank of America Merrill Lynch, said the bank initially set a goal to reach $20 billion in low-carbon lending, investing and other support. But it was achieved four years ahead of schedule.
“We've upped that [goal] to $50 billion,” Wood said in a panel discussion following McCarthy's speech, adding that the market reaction to Bank of America Merrill Lynch's low-carbon financial offerings, such as green bonds, “has been nothing short of spectacular.”
The bank, which became the first corporate green bond issuer in the U.S. last year, issued a second $600 million green bond May 14 (see related story)(225 DEN B-1, 11/21/14).
Bloomberg, the parent company of Bloomberg BNA, was one of the sponsors of the conference.
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Fossil Fuel Industry Said Looking at Ways To Ensure Its Part in Low-Carbon Future
May 15, 2015 | BNA Daily Environment Report
By Joyce E. Cutler
The fossil fuel industry accepts climate change as a reality and now is considering ways to ensure it has a slice of the marketplace, Environmental Protection Agency Administrator Gina McCarthy said.
Climate change presents an opportunity for the United States to advance technologies, which is where the energy world is investing its money, and to “take actions that take the challenge of climate change into an economic opportunity investing in a low-carbon future,” McCarthy said May 13.
“It could never be more of an opportunity to actually move to a more sustainable economy” and help promote U.S. technologies across the world, she told an audience at the Commonwealth Club of California's Climate One forum.
Carbon, McCarthy said, “has a price on its head,” and the U.S. government looks “for every opportunity we can” to create economic prospects for home-grown technology.
“The issue with carbon is it's really no different than any other pollutant, and we really have to send the right signals and the rest happens,” she said.
McCarthy said she's had much discussion with the oil and gas sector about reducing methane, which the UN Framework Convention on Climate Change said is 21 times more potent than carbon dioxide over a 100-year time span and 56 times more potent over a 20-year period.
The EPA plans to directly regulate methane emissions from new oil and natural gas wells for the first time as part of a White House strategy to curb methane emissions. The EPA plans to propose the rule this summer, with a final rule expected in 2016 (10 DEN A-1, 1/15/15).
U.S. Technology's Edge in Paris Talks
“We can have the edge we actually need to get into Paris and really make a difference,” McCarthy said, referencing the end-of-year global climate talks sponsored by the United Nations with a goal of negotiating a worldwide climate agreement.
The U.S. has pledged to tackle methane emissions as part of its pledge to the UN to reduce greenhouse gas emissions 26 percent to 28 percent below 2005 levels by 2025 (219 DEN A-8, 11/13/14).
“Every fossil fuel person right now is thinking that climate change is real and a low-carbon future is inevitable. What they're trying to figure out is where their place is and how they maintain their place in that system,” McCarthy said.
Renewables Advancing in Technology
“I think that we are now seeing renewables in levels we haven't seen before, and that's because they're becoming more cost competitive,” said McCarthy, who earlier in the day was in the San Francisco Bay Area to advance a regional solar array partnership on unused land and public buildings.
“There's many innovations we have already put on the table” and “absolutely no reason why not [to] take advantage of that,” she said.
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Virginia's Coal Ash Regulations Weak, Environmental Groups Say
May 15, 2015 | BNA Daily Environment Report
By Jeff Day
Virginia's regulations governing the disposal and storage of coal ash are woefully weak, allowing hazardous coal ash ponds and unlined coal ash pits to remain in place where they pose significant human and environmental health risks, according to a new report.
Produced by the Virginia Conservation Network in partnership with Clean Water Action, Earthjustice and the Virginia League of Conservation Voters Fund, the May 13 report said Virginia's regulation of coal ash today is no better than North Carolina's was prior to the massive coal ash spill into the Dan River in 2014.
Asked about the report, Virginia Department of Environmental Quality spokesman Bill Hayden told Bloomberg BNA May 14 that the agency agrees that “Virginia's coal ash regulations need to be strengthened.”
The report said:
• Virginia waterways have millions of tons of toxic coal ash behind old earthen dams like the one that collapsed on the Dan River;
• every major region of the state contains coal ash ponds that are leaking and unstable, creating the potential for another major environmental catastrophe;
• DEQ doesn't require consistent monitoring of water supplies near coal ash dumps and
• DEQ regulates coal ash less stringently than household garbage.
The Environmental Protection Agency's new coal ash regulation gives Virginia authority to establish adequate coal ash regulations, the report said.(74 DEN A-4, 4/17/15)
DEQ Deferred to U.S. Agency
Hayden said the DEQ has been planning stronger coal ash regulation for several years. However, he said the agency “put things on hold” when the EPA said it was going to reevaluate its coal ash regulations.
Now that the EPA has issued the new rule, “DEQ will move forward with strengthening Virginia regulations,” Hayden said.
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Manchin, Heitkamp Introduce Slew of Bills to Promote Clean Coal Technologies
May 15, 2015 | BNA Daily Environment Report
By Anthony Adragna
Moderate Democratic Sens. Joe Manchin (W.Va.) and Heidi Heitkamp (N.D.) introduced five bills the week of May 11 that they said would provide a “viable path forward” for coal to remain a strong part of the national energy mix.
“It's time for both sides of the debate about coal to get on board with the fact that coal is a reliable and abundant resource that we should continue to use,” Heitkamp said in a May 14 statement. “But we can do it in a way that is cleaner and more efficient.”
The bills are:
• S. 1282, which would require designating the improvement of conversion, use and storage of carbon dioxide produced from fossil fuels as an official Energy Department priority.
• S. 1283, which would have the Energy Department establish a coal technology program to develop innovations that would improve the efficiency, effectiveness, cost and environmental performance of coal.
• S. 1285, which would authorize the Energy Department to enter into pricing stabilization agreements. The senators said these agreements would help encourage public-private investments into carbon capture and sequestration projects.
• S. 1293, which would make the Energy Department the lead federal agency in charge of coordinating all regulatory and permitting requirements under federal law for clean coal projects. It would require federal agencies to enter into memorandums of understanding for projects and set deadlines for completing milestones that would be subject to judicial review if not reached.
• S. 1306, which would require the Energy Department to study recommended changes to its clean coal loan guarantee program. That program received an authorization of $8 billion in 2008 but has yet to use the funds for carbon capture and sequestration projects.
Bills Incorporate Heitkamp Measures
The bills incorporate ideas from Heitkamp's Advanced Clean Coal Technology Investment in Our Nation Act of 2015 and legislative efforts from previous congressional sessions.
Heitkamp offered the ACCTION Act (S. 601) Feb. 26. None of the previous legislative efforts from the Democratic pair have received consideration to date in the Senate(39 DEN A-3, 2/27/15).
Both Manchin and Heitkamp said coal will remain a critical part of the American energy mix for the foreseeable future and believe the country should invest significant additional resources toward developing cleaner technologies.
The U.S. Energy Information Administration predicts that coal will still account for nearly one-third of the nation's electricity by 2040, marking just a slight drop from its 39 percent share of the electricity generation mix today.
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Senate to Mark Up Energy, Water Appropriations Bill
May 15, 2015 | BNA Daily Environment Report
The Senate's fiscal year 2016 energy and water appropriations bill is expected to be marked up by an Appropriations subcommittee May 19, Tom Mentzer, a spokesman for Sen. Dianne Feinstein, the top Democrat on the Subcommittee on Energy and Water Development, told Bloomberg BNA May 14.
Details of the legislation, which would provide annual funding for the Energy Department, U.S. Army Corps of Engineers, Bureau of Reclamation and independent agencies such as the Nuclear Regulatory Commission, aren't expected to be unveiled until the markup.
The House voted May 1 to pass a $35.4 billion fiscal year 2016 energy and water spending bill that would appropriate $29 billion for the Energy Department, $5.6 billion for the U.S. Army Corps of Engineers and $1.1 billion for the Bureau of Reclamation (85 DEN A-17, 5/4/15).
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White House Meeting With Stakeholders On Hot-Button Rule
May 14, 2015 | E&E News PM
By Annie Snider
The White House has held at least 12 meetings with stakeholders on a proposed water rule, as the Obama administration puts its finishing touches on the regulation.
Since April 15, groups including the U.S. Chamber of Commerce, Trout Unlimited and the state of Oklahoma have sent staff to meetings at the White House Office of Management and Budget's Office of Information and Regulatory Affairs, where the Waters of the U.S. rule is undergoing final interagency review. http://www.reginfo.gov/public/do/eom12866SearchResults?view=yes&pagenum=0
OIRA staffers are known for sitting stone-faced and silent as stakeholders lay out their positions on the regulation at hand. But Steve Taylor, executive director of the Missouri Agribusiness Association, said staffers seemed interested in hearing about the approach his state took to determining which streams and lakes should be "classified" under the Clean Water Act, meaning that they would receive a designated use that also determines what levels would constitute polluted.
In Missouri, the state brokered a compromise that starts by classifying all waters of a certain magnitude that appear on maps and then allows streams and creeks to be added or subtracted from that list based on evidence about their importance. That's a similar method to the one proposed in Senate legislation being promoted by opponents of the water rule.
"OMB seemed to be looking for a process," Taylor said. "I talked about how this had added clarity for us in Missouri, and how that base line could expand in some cases and in others retract."
A staffer from the Small Business Administration's Office of Advocacy also joined many of the meetings, according to records -- not a typical move. That office last fall called for the withdrawal of the water rule, arguing that the Obama administration incorrectly concluded that the rule would have minimal impacts on small businesses (E&ENews PM, Oct. 1, 2014).
Jan Goldman-Carter, senior manager for wetlands and water resources at the National Wildlife Federation, said that she and other supporters of the rule invited owners of small businesses to one of the OIRA meetings with this in mind.
"We invited these people -- a bed and breakfast owner, fly fishing businesses ... to talk about being really dependent on clean water for their livelihoods," Goldman-Carter said.
Meanwhile, agency leaders are looking ahead to what happens after the rule is finalized.
Ken Kopocis, the top official at U.S. EPA's Office of Water, said this morning that his agency and the Army Corps of Engineers are preparing to issue implementation guidance and educate their own rank and file about the rule.
"We will be undertaking a very aggressive education and outreach program as soon as the rule is signed," Kopocis said, speaking at an American Law Institute conference on wetlands law and regulation. "We'll also be looking to participate with our state partners to see how we can work things out to get out as to what is in the new rule and how it will be implemented, and we also want to reach out and talk with the regulated public as well."
Kopocis said that EPA sees the rule as "a real opportunity" to tackle not just the long-standing confusion around the scope of the Clean Water Act but also some of the inconsistencies in how jurisdictional calls have been made across the country.
"The lack of uniformity in the application of the current rule is something that we hope to cure in the new rule," he said.
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(ACC Mentioned) Shippers Hoist By Own Petard At House Hearing
May 14, 2015 | RailwayAge
By Frank N. Wilner
Poor Mr. Dooley—Calvin, that is, president of the American Chemistry Council and not the fictional Mr. Dooley created during the late 19th century by humorist Finley Peter Dunne. The latter gained library space in Teddy Roosevelt’s White House; the former seemed to hoist himself by his own petard—Shakespeare speak (“Hamlet”) for the bomb maker managing to blow himself up with his own device.
It happened during Calvin Dooley’s testimony May 13 before the House Rail Subcommittee that was reviewing—and largely celebrating—35 years of partial deregulation under the 1980 Staggers Rail Act.
Twice Dooley wrongly suggested to the House Rail Subcommittee that the bipartisan leadership of the Senate Commerce Committee is supporting, in Senate Bill 808, the Surface Transportation Board Reauthorization Act of 2015, open access (also called reciprocal switching). Open access would mandate that two Class I railroads be available to compete for freight carloads even if the tracks of only one railroad serve a shipper’s facility—and without a shipper first demonstrating a pattern of railroad anticompetitive conduct or showing any competitive need for such interference in railroad business dealings.
There is no House version of S. 808, which, if passed by the entire Senate, would be sent to the House for consideration. Actually, S. 808 is supported by railroads and major shipper groups (including the American Chemistry Council, although its president seemed confused as to its provisions). This is a link to S. 808.
Dooley’s American Chemistry Council, and other shippers asserting few or no effective transportation alternatives to one railroad, have long sought open access as a device to lower their freight rates through government fiat. The National Industrial Transportation League (NITL) has petitioned the Surface Transportation Board (STB) to use its regulatory authority to mandate open access. By Dooley’s own admission, an open access requirement would strip $1.2 billion annually from railroad revenue at the same time Dooley’s members, who produce and ship an inventory of the most toxic commodities, require and demand adequate, efficient and safe rail transportation. Railroads assert the revenue hit would be far greater.
There is another unintended consequence to open access beyond reducing revenue and retarding capital investment in railroad infrastructure as profit falls. Open access, by giving shippers a second railroad, could snuff-out any captivity assertion, meaning were a shipper still dissatisfied with the rate offerings, there would be no option to file a rate complaint with the STB—where, in fact, rate relief could be greater. While it is unlikely either the Senate or House will impose an open access requirement, the STB could, as will be explained.
Two mainstream economists—Harvard-trained Robert Gallamore, in an op-ed article published May 12 in a Capitol Hill newspaper; and Georgetown University economist John W. Mayo, who testified May 13—independently cited boundless and conspicuous evidence that a “light touch regulatory approach” (Mayo’s words) since passage of the Staggers Rail Act is responsible for the railroads’ record capital investment and that Congress should use extreme caution in tinkering with the law.
Gallamore, author of a recent textbook on railroad deregulation—in conjunction with the late Harvard and Yale economics Professor John R. Meyer—wrote in his op-ed that open access “would vastly complicate rail operations, labor agreements and, perhaps, compromise safety while reducing money needed to expand capacity.”
Association of American Railroads President Ed Hamberger told the subcommittee that while “pundits across the political spectrum” are calling for more private-sector investment in infrastructure, and “Congress is wrestling to find money, [it is] thanks to the Staggers Rail Act [that] the freight rail industry quietly goes about its business spending $29 billion” annually on new and expanded rail infrastructure and maintenance—19% of its revenue reinvested vs. only 3% for American industry in general.
Hamberger quoted one of Dooley’s own members, implying the hypocritical position of the American Chemistry Council with respect to railroads: “Why do we deserve to maintain our [pricing margin]? So that we can continue to invest and create new products for our customers … [I]f we don’t do that, then our margins will go down. Then in order to keep the investors happy, we would have to cut R&D, we would have to cut development, and as a result five years from now, our customers wouldn’t have what they need. So, it’s really for the good of our customers that we need to be a viable organization.”
As with publicly traded chemical manufacturers and other publicly traded companies, railroads “must provide their shareholders a return commensurate with what those shareholders could obtain in other markets with comparable risk,” Hamberger said. “If railroads are viewed as returning less to shareholders (because of misguided regulations or any other reason) than comparable investment opportunities, then capital will flee the rail industry or will only be available at much higher costs than we see today.”
Transportation & Infrastructure Committee Chairman Bill Shuster (R-Pa.), who attended the subcommittee hearing, confronted Dooley over his lament that so-called captive shippers require government intervention beyond protections already available through the Staggers Rail Act. Shuster said many of these manufacturers “build facilities to be captive shippers” and they must see other benefits in consciously making themselves captive to one railroad.
Subcommittee Chairman Jeff Denham (R-Calif.) praised the Staggers Rail Act as substituting “market-driven rates [for] ones handed down by Washington bureaucrats.”
Shuster said, “[We] need to make sure we are doing the right things in Congress to stay out of the way where necessary and assist where necessary.” Shuster called S. 808, “intriguing,” saying that while “we need to take a careful look at it, [we also must] make sure we retain the strength of our railroad system that is the envy of the world.”
In a bipartisan leadership statement prior to the hearing, Shuster was joined by Peter DeFazio of Oregon, the Transportation & Infrastructure Committee’s senior Democrat, in writing that “freedom to set rates means that technological and productivity enhancements can be pursued since costs can be recovered. And where cost savings were found, shippers have shared in that reduction.”
In previous years, the Transportation & Infrastructure Committee took an even stronger stance in support of the Staggers Rail Act. In a January 2011 letter to the STB, the committee’s bipartisan leadership said, “Any policy change made by the STB which restricts the railroads’ ability to invest, grow their networks and meet the nation’s freight transportation demands will be opposed by the committee.” Signing that letter were John Mica (R-Fla.), then committee chairman; Nick Rahall of West Virginia, then the committee’s senior Democrat; Shuster, who was then chairman of the Rail Subcommittee; and the subcommittee’s then senior Democrat, Corrine Brown.
Captive shippers drew some comfort from the testimony of STB Acting Chairman Deb Miller, whose recurring theme in written and oral testimony, and in response to lawmaker questions, was that while the economics and facts of each rate complaint may not favor the shipper position, they won’t be disrespected in the process as many shippers have come to perceive.
Miller was contrite in acknowledging that STB procedures in deciding rate complaints are time consuming and extremely costly to shippers. At the same time, Miller said the complexity of many rate cases, with outcomes worth hundreds of millions of dollars, cannot be decided in six months. She assured lawmakers that the STB is seeking alternatives to lower the cost to shippers of advancing rate complaints and shorten the time required by the STB to investigate and reach a decision.
Without attaching any merit to the NITL petition for STB action in mandating open access, Miller said it is time to give the petition formal consideration. “I regret to say that this proceeding has been pending at the board for far too long. The board asked for extensive data about the impact the proposal would have on the industry back in July 2012. Despite the fact that our stakeholders spent significant resources to provide the board with this requested information, it has not acted. The board owes them a decision on what it plans to do with the proposal. She suggested that could occur as early as fall.
“With an improved network and more reliable rail service, Staggers can be said to have benefitted all rail industry stakeholders, even those captive shippers forced to bear the costs of the higher rates,” Miller said.
Although possessing no railroad background and at the STB for only a year (its acting chairman only since January), Miller demonstrated in-depth subject knowledge, was not intimidated by some lawmaker questions that seemed intended to intimidate, and appeared absolutely at ease. She has an extensive background in state administration, including serving as secretary of transportation in the administrations of two Kansas governors of different political parties. Her testimony was in contrast to a somewhat halting performance by former STB Chairman Dan Elliott May 6 at a Senate confirmation hearing as part of his attempt to return as chairman. Elliott seemed not to be in command of the subject matter at that hearing.
Also testifying before the House Rail Subcommittee May 13 was American Short Line and Regional Railroad Association President Linda Darr, who said that “many of the economic freedoms and regulatory flexibility embodied in [the Staggers Rail Act] allowed the railroads to save light density branch lines rather than abandon them. In creating the modern-day short line industry, the Staggers Act ensured that huge areas of rural and small town America would stay connected to that national railroad network.
“For the small businesses and farmers in those areas,” Darr said, “our ability to take a 25-car train 50 miles to the nearest Class I interchange is just as important as the Class I’s ability to attach that block of traffic to a 100-car train and move it across the country. Tens of thousands of rail customers cannot make the journey across the country without Class I railroad service. But they can’t start that journey without short line service.” Saying short lines reinvest as much as 30% of their annual revenue in infrastructure renewal, expansion and maintenance, Darr asked the subcommittee to support an extension of a federal tax credit for the short line industry (not major railroads) that helps leverage that investment.
A note on full disclosure. Professor Mayo, who co-authored a recent paper in support of the Staggers Rail Act, revealed in the paper that partial funding for the research—“but neither directives nor directions”—was provided by the Association of American Railroads. He did not reveal that financial support while testifying. Gallamore, whose op-ed in The Hill newspaper identified him as “a former government policy administrator and nationally recognized expert on railway and intermodal economics, technology and safety,” did not indicate in the op-ed that for much of his career he was employed by Union Pacific.
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Public Interest Groups Petition Ninth Circuit To Review Provisions of Crude-by-Rail Rule
May 15, 2015 | BNA Daily Environment Report
By Rachel Leven
Several public interest groups, including the Sierra Club, petitioned a federal appeals court May 14 to review a Transportation Department rule on rail shipments of flammable liquids (Sierra Club v. Foxx, 9th Cir., docket number unavailable, 5/14/15).
The Pipeline and Hazardous Materials Safety Administration was arbitrary and capricious in determining the timeline for older tank cars to be phased out of crude oil service, the notification requirements for railroads, the requirement for retrofitted tank cars' shell thickness and the requirement for speed limits, the groups alleged in their petition to the U.S. Court of Appeals for the Ninth Circuit.
“The Department of Transportation's weak oil train standard just blew up in its face on the plains of North Dakota last week,” Patti Goldman, an Earthjustice attorney, said in a statement referring to a May 6 crude oil train derailment. “Pleas from the public, reinforced by the National Transportation Safety Board, to stop hauling explosive crude in these tank cars have fallen on deaf ears, leaving people across the country vulnerable to catastrophic accidents.”
This challenge comes days after the American Petroleum Institute filed its own petition against the rule in the U.S. Court of Appeals for the D.C. Circuit. Transportation Department Secretary Anthony Foxx previously said he believes the rule would hold up in court (91 DEN A-9, 5/12/15).
The rule and these challenges aim to address a string of recent high profile derailments of tank cars carrying crude oil, which have resulted in threats to drinking water and other environmental and property damage. The rule, which was released May 1, specifically aims to mitigate risks associated with these low-frequency, high-consequence incidents.
The appeals court should remand to the agency tank car phaseout and speed limit provisions, and vacate and remand notification requirements regarding the disclosure of movement of crude oil trains, ForestEthics, Sierra Club, Waterkeeper Alliance, Washington Environmental Council, Friends of the Columbia Gorge, Spokane Riverkeeper and the Center for Biological Diversity said in their petition.
A May 2014 Transportation Department emergency order on notification requirements that are more stringent than those in the final rule should “remain in place” as the department moves to promulgate a new rule on the notification issue, the petition filed by Earthjustice said.
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U.S. Crude-by-Rail Rules Face Fresh Challenge
May 14, 2015 | The Wall Street Journal
By Laura Stevens
Environmental groups are the latest challengers to push back against the new crude-by-rail rules with filings in federal court that argue the new regulations are too weak.
Earthjustice filed a petition with the U.S. Court of Appeals for the Ninth Circuit in San Francisco on Thursday on behalf of seven nonprofits, arguing the timeline to phase out dangerous older tank cars is too long and that the standard for upgrades is too weak.
The Earthjustice filing also seeks lower speed limits for trains carrying hazardous flammable liquids and requirements that railroads provide more information about the routing of dangerous goods to the public.
“Explosive oil trains present real and imminent danger, and protecting the public and waterways requires an aggressive regulatory response,” said Marc Yaggi, executive director of Waterkeeper Alliance, one of the organizations named in the filing. “Instead, the Department of Transportation has finalized an inadequate rule that clearly was influenced by industry and will not prevent more explosions and fires in our communities.”
The petition follows two separate challenges to the rule earlier this week. Two Illinois municipalities are also seeking to shorten the timeline for phasing out older tank cars, among other demands. The American Petroleum Institute, which represents the oil industry, is seeking more time to make retrofits to oil tankers because of manufacturing-capacity restraints.
The railroad industry also plans to challenge the new rules, either by petitioning the Transportation Department for reconsideration or in court.
The Department of Transportation didn’t immediately respond to a request for comment. When the rule was announced May 1, officials said that it was comprehensive and would dramatically improve the safety of transporting dangerous goods by rail. Department of Transportation Secretary Anthony Foxx said he believed it would stand up to a legal challenge.
The new rules require tank cars carrying crude oil and other hazardous flammable liquids to be outfitted with new safety features over the next decade. Additionally, they call for new safety measures including new and expensive brakes for longer trains, among others.
The groups named in the petition filed Thursday include Sierra Club, ForestEthics, Washington Environmental Council, Waterkeeper Alliance, Friends of the Columbia Gorge, Spokane Riverkeeper and the Center for Biological Diversity.
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