President’s Message: Attend Chemicals Day 2011 on March 9th

TCC President & CEO Hector L. Rivero

It’s not too late to join the Texas Chemical Council and Association of Chemical Industry of Texas for Chemicals Day at the Texas Capitol on Wednesday, March 9th.

Chemicals Day 2011 will give industry representatives the opportunity to meet with elected officials to discuss the importance of the chemical industry in Texas, and promote how our industry enhances the daily lives of Texans.  TCC member companies have once again donated consumer products that will be distributed to legislative offices, but this year in a reusable plastic shopping bag instead of a bucket.

The day will include issue briefings on pending legislative proposals, and updates from key elected officials including: Senate Natural Resources Committee Chairman Troy Fraser, House Environmental Regulation Committee Chairman Wayne Smith, House Speaker Joe Straus and Governor Rick Perry’s Legislative Director Ken Armbrister.  Your attendance will help to increase awareness of our industry and the value we bring to the State of Texas.

Chemicals Day activities begin with a dinner at Sullivan’s Steakhouse on Tuesday, March 8th sponsored by The Mundy Companies. For more information on the dinner, click here.

The following morning, breakfast will be served at the Texas Capitol beginning at 7:30 a.m. in the Legislative Conference Center (Room E2.002). From 9:00 a.m. to 12:00 noon, we’ll hear briefings from elected officials in the Capitol Auditorium (Room E1.004), with lunch to follow. For more information or to register for Chemicals Day, please click here. 

Texas House Committees Examine Conflict between EPA and State Regulators

On February 23rd, the House Committees on Environmental Regulation & Energy Resources held a joint hearing to examine the ongoing issues between state regulators and EPA. Energy Resources Chairman Jim Keffer opened the meeting by reporting that EPA had declined their invitation to testify.

TCEQ Chairman Bryan Shaw

TCEQ Chairman Bryan Shaw covered two specific issues with the federal government: EPA’s disapproval of the Texas Flexible Permit Program, and EPA’s recent takeover of Texas’ greenhouse gas permitting.

Chairman Shaw said the Flexible Permit Program – first approved in 1994 – allowed companies some operational flexibility in exchange for reduced emissions at grandfathered facilities, which would have been otherwise untouchable by state or federal regulations.

“EPA had expressed some concern (of the program) over the years, but EPA regional administrators actually attended ribbon-cutting ceremonies of some of those (Flexible Permit) facilities,” said Shaw. “EPA simply misunderstood many issues; EPA doesn’t want a (Flexible Permit) program, regardless of the facts,” he said.

Shaw characterized EPA in the Obama administration as “power drunk”, when it comes to the federal government’s relationship with Texas. 

According to Shaw, EPA forced proposed greenhouse gas regulations through in a very short time period – a matter of months, rather than years compared to ozone standards. He went on to say, “the Clean Air Act is an especially poor vehicle to regulate greenhouse gases,” and warned that unintended consequences of issues like fuel switching would need to be explored.

Shaw told legislators that EPA has taken over GHG permitting in Texas, but said, “we don’t know what that program will look like yet.”

Shaw also said the Texas Emissions Reduction Plan (TERP) and AirCheck Texas: Drive a Clean Machine (also know as LIRAP) are two programs that are part of Texas’ innovative and proactive strategies to reduce mobile sources that are federally regulated.

TCEQ Executive Director Mark Vickery discussed the practical impacts of EPA actions, including regulatory uncertainty by industrial facilities in Texas.  He said what’s missing from much of the debate is the “tremendous success in Texas to improve air quality.”

When asked by committee members if TCEQ had continued communications with EPA, Vickery responded, “Yes, strained but ongoing communications.”

Finally, Deputy Attorney General Bill Cobb summarized the ongoing litigation brought by the State of Texas against EPA, with all appeals pending in the Washington D.C. Court of Appeals.

“A Bag’s Life” Campaign Kicks Off to Promote Plastic Bag Recycling

Texas has launched a statewide plastic bag recycling program in conjunction with the national “A Bag’s Life” program, which includes about 1,800 retail drop-off locations across the state.

The program uses social media and advertising to get the word out about the three R’s of plastic bags: reduce, reuse and recycle. The website, www.abagslife.com, has more details, and a smartphone application helps consumers locate the nearest place to drop off used plastic bags.

In addition to the retailers, scores of state agencies are involved in the initiative, which is already in place in Florida and Virginia. The website and program was launched at the state Capitol on February 15th by a dozen retailers representing more than 2,000 stores statewide.

“Even in rural areas people are going to have an opportunity to collect plastic and recycle it,” said Buddy Garcia, Commissioner of the Texas Commission on Environmental Quality (TCEQ).

“These are plastic bags, the flexible bags that you get at the grocery store,” said Ronnie Volkening, president of the Texas Retailers Association. “Dry cleaning bags, the bags that your newspaper may be wrapped in, shrink wrap like when you buy bottled water or paper towels that come bundled together. Because the simple fact is plastic bags are completely recyclable and they can be recycled into useful consumer products,” Volkening said.

The Texas Retailers Association said one local store has taken three billion pounds out of landfills and put those bags to good use, such as the large bench that was on display at the news conference, which was made of sawdust and recycled plastic bags. It will be donated to Blue Bonnet Elementary School because of its dedication to recycling.

A statewide reduce-reuse-recycle pilot program has been in the bag for about three years, and the TRA said it is working.

TRA reports that in June 2006 there were 215,000 pounds of plastic recycled. By late 2008 more than 278,000 pounds were recycled; by 2009, it was more than 374,000 pounds. With numbers like these Volkening said there is no need to completely get rid of plastic bags altogether as some cities suggest.

“Whether it’s bringing groceries home from the store, whether it’s your local paper being wrapped in a plastic bag so that it doesn’t get wet on rainy days -- there are certain uses that would really be hard to find a suitable replacement,” he said.

Volkening said the key is to repurpose with a clear purpose.

A Bag’s Life will hold a contest for Texas high school students to win cash for videos they have created, called “Caught in the Act.” It is a chance for students to show creative ways to reduce, recycle and reuse plastic bags.

Key dates for the Texas high school video contest:
- May 27, 2011 at 5 p.m. Eastern Time – Deadline to submit videos. In Texas, up to 10 videos will be selected by a panel of judges and then posted here. They will be chosen based on originality, content of message, relation to theme and video/audio quality.
- June 3, 2011 – Finalist videos posted online and voting begins at 9 a.m.
- June 26, 2011 at 5 p.m. – Online voting ends.
- July 1, 2011 – The six winners will be announced (three in each category).

There are two categories – Reuse Fun and Recycling Educational. Two Grand Prize Winners in each category will win $1000 each. Two Second Place Winners in each category will win $500 each. Two Third Place Winners in each category will win $300 each.

“Texans know it makes sense to re-use or recycle more plastic bags,” said Texas Land Commissioner Jerry Patterson. “A Bag’s Life brings retailers, state and local government officials and plastic bag producers together to work to reduce the number of bags in our landfills. And I think Texans working together can make a significant difference.”

U.S. House Votes to Defund EPA Effort to Regulate Greenhouse Gases

Republicans in the U.S. House of Representatives led a charge late into the night on February 18th against Obama administrations decision to regulate greenhouse gas emissions.

The continuing resolution (CR) faces an uphill climb in the Senate and a veto threat from President Barack Obama, but the myriad of votes against the administration’s energy and environmental initiatives will likely not be the last.

Rep. Mike Simpson (R-ID), chairman of the Interior-EPA Appropriations subpanel, said the strong support for riders blocking the Environmental Protection Agency will build momentum for future attempts to pass more permanent pushbacks on the agency’s regulations.

“The same thing that you see on the floor with all the people offering amendments [on EPA] is the same thing I hear out in my district,” Simpson said. “If the issue of the EPA comes up, it dominates the rest of the conversation, and the EPA needs to know that.”

The entire debate – covering hundreds of amendments over several days – was largely anticlimactic as well-worn partisan differences ruled the day. Democrats didn’t even bother to offer amendments aimed at stripping out the Republican language trumping EPA’s ability to regulate greenhouse gas emissions.

“I didn’t see any reason to,” Energy and Commerce ranking member Henry Waxman (D-CA) said. “I didn’t want to make a bad bill any better. I didn’t think it was likely to pass given the makeup of the House.”

Waxman noted that an amendment Friday afternoon from Rep. Ted Poe and fellow Texas Republicans that minimally clarified the language already in the underlying bill won by a vote of 249-177, falling short of the two-thirds needed to overcome an expected White House veto.

With Senate Democrats insisting that Republican policy riders must be removed in order to pass a short-term spending plan and avoid a government shutdown, there is seemingly little likelihood that any of the amendments passed by the House will make it to the president’s desk.

“This bill is a joke cause it’s not going to become law,” Waxman said. “We’re spending an enormous amount of effort on amendments … to make a statement on a whole bunch of policy issues. A lot of these fights get dissipated as time goes on.”

“I think that we in the Senate will be reluctant to pass a CR that’s loaded up with wish list items,” Sen. Mark Pryor (D-AR) said.

Simpson said the House shouldn’t concern itself with what the Senate will or won’t do. “We can’t base what we do on what we think the Senate might do. We have to do what we think is right,” he said.

The debate over EPA’s climate regulations will not go away easily, however. Senate Democrats like Mary Landrieu (D-LA) will be pursuing language in the upcoming fiscal 2012 spending bill and elsewhere to block the agency’s greenhouse gas emissions plan.

Sen. John Rockefeller (D-WV) said that he is planning to counter House Republicans’ efforts and offer his two-year delay as an alternative to the House spending bill language.

Rockefeller has six Democratic co-sponsors for his bill, and has said he’s confident he can get the 60 votes needed to clear the Senate.

Democrats who have supported Rockefeller’s effort to delay EPA – and even perhaps going further and permanently blocking agency controls – are not in favor of doing so on a continuing spending resolution that is meant to avoid a government shutdown.

“I would support some of the policies but not on this,” Landrieu said of the House bill. “I’ve supported riders before on appropriation bills, and I most certainly will hold that prerogative to support them. But not on a CR that threatens to shut down the government. I think it should be as clean a CR as possible.”

Aside from slashing EPA’s budget by about $3 billion – which is nearly 30 percent below fiscal year 2010 – the House passed several riders attacking agency decisions on a host of hot-button issues.

On climate change, the House adopted Science Chairman Ralph Hall’s amendment preventing funds from establishing NOAA’s Climate Service, 233-187. Lawmakers also approved an amendment from Rep. Blaine Luetkemeyer (R-MO) barring contributions to the Intergovernmental Panel on Climate Change (or IPCC), 244-179.

Republicans also flexed their legislative muscles against long-targeted Obama administration “czars” – voting to eliminate funding for outgoing top White House climate and energy adviser Carol Browner and others in the administration overseeing climate change, green jobs and other policies.

EPA Issues Boiler Rules

The Environmental Protection Agency recently issued final regulations on cutting air pollutants such as mercury and soot at boilers, which provide heat and power at factories, and incinerators.

The new standards will cost industries such as chemical plants, paper product makers, and manufacturers $2.1 billion a year, down from $3.9 billion annually rules proposed last year would have cost, the EPA said.

While the rules are only a minor part of the EPA’s agenda this year, they come at a time when the agency is racing to deliver on President Barack Obama’s promise to show the world that the United States is taking action on climate change.

Manufacturers and other industries have complained that a slate of looming EPA rules on toxic pollution and greenhouse gases would kill jobs while the economy is fragile. Many lawmakers in the Republican-controlled House of Representatives have said the EPA would unfairly burden business.

EPA Administrator Lisa Jackson is battling fierce legal and legislative challenges in her drive to crack down on greenhouse gas emissions. The decision came after receiving about 4,800 comments from industry and communities.

“Because the final standards have been informed by a robust data set and comments we've received following the proposal, they are realistic, they are achievable ... and come at about half the cost to industry,” Gina McCarthy, an EPA assistant administrator for air, told reporters in a teleconference.

The final rules were more flexible than the proposed regulation, by allowing, for example, companies to fine-tune their pollution systems rather than add costly new controls. It was unclear how pollution rates would be changed by the EPA rewrite of the rules, but the agency said many health benefits would be achieved.

The EPA was under court order to issue the rules. The agency had asked for more time, but the request was refused. In a rare move, the EPA said because the final rules had been changed substantially from the proposal, it would allow further public review of the standards.

Fred Upton, the chair of the House Energy and Commerce Committee, one of many Republicans trying to stop the EPA from making broad changes in air pollution regulation, said the agency should take more time. “We cannot afford to rush sweeping regulations that have the potential to do more harm than good,” he said.

The somewhat arcane boiler rules aim to reduce emissions with so-called “maximum achievable control technology” or MACT. In March, the EPA is expected to propose more widely watched MACT rules on toxic emissions from power plants. Those regulations will likely be opposed by some power companies and lawmakers from states with economies that depend heavily on coal because the rules could shut old plants that run on that fuel.

The EPA also plans to issue rules on emissions of greenhouse gases from oil refineries and power plants later this year.

EPA Gearing Up for Regulatory Review

The Environmental Protection Agency is gearing up for a wide-ranging internal review of its various regulations to ensure they are not “outmoded, ineffective, insufficient, or excessively burdensome.”

EPA said Friday it is seeking public input as to how it should structure a plan to review its regulations. The agency will hold a public meeting on its regulatory review plan in Washington on March 14.

“These outreach efforts will allow the public to provide EPA with feedback on specific issues, impacts or programs,” EPA said in statement.

The review will likely give opponents of EPA’s climate regulations another opportunity to express their well-documented concerns over the rules. Republicans have said EPA should scrap plans to impose new climate regulations under the review, but the agency has said it is “confident” that a review of its climate rules will show they “pass muster” under a regulatory-review framework mandated by President Obama.

The EPA review is part of an administration-wide plan outlined by Obama last month. Under the Obama’s new regulatory framework, federal agencies must review current regulations and ensure upcoming regulations meet new standards regarding transparency, science and economic impact.

The agency’s plan, which will outline the regulations the agency will review, will be released in late May.

U.S. Chemical Industry Poised for Economic Recovery

While the global recession hit the chemical industry very hard, 2010 has been a positive economic turnaround, and analysts are predicting continued improvement in this year and next.

According to Zacks Investment Research, many chemical companies were forced to shelve their growth strategies when faced with a lack of demand from most industries. Companies looked for avenues to streamline operations and increase productivity, and accordingly, they resorted to restructuring and cost-cutting initiatives to survive the worst of the recession.

Fortunately, the global chemical industry is recovering from the recession. Domestically, chemical production volumes have increased across all regions of the United States in 2010, reversing the steep declines in 2008 and 2009. The largest gains have occurred along the Gulf Coast, boosted by export demand for basic chemicals and plastics. Output is expected to grow moderately in all regions in 2011 and continue to improve through 2012, according to Zacks.

Growth in export markets has been driven by several factors including favorable energy costs and demand from emerging markets where recovery and expansion have been the strongest. The American Chemistry Council (ACC) reports U.S. exports will grow by 9.7% in 2011, outpacing the expected 7.8% growth in imports.

Zacks indicates that the cost-containment measures implemented by chemical companies should continue to bolster industry, which could lead to growth opportunities.

The U.S. home building sector is a major consumer market for the chemical industry, accounting for about 10% of chemical demand. According to ACC, each 100,000 housing starts generate $1.5 billion in chemical sales. The National Association of Home Builders (NAHB) reports new housing starts marginally rose 7% for 2010. NAHB expects annual housing starts for single-family homes to climb a much stronger 21% to 575,000 units in 2011.

On the flipside, U.S. unemployment will likely remain high in 2011; credit markets remain tight and mortgage rates will likely increase in 2011, perhaps limiting any noteworthy rebound in the housing market. Zacks expects the housing sector to begin a slow recovery toward its pre-recession peaks in 2011.

The automotive industry also accounts for 10% of the chemical industry’s demand, and the sector has started showing signs of recovery. ACC estimates U.S. automobile sales will reach 12.7 million units in 2011, nearly 10% more than last year.

The remaining demand comes from the agriculture, architectural and industrial coatings, paper and textile, electronics and a variety of other industries. Growing emerging markets should propel production in the paper and textile industry while the electrical industry is expected to pick up with increased industrial investment. Other industries, including food and agriculture, are also likely to gain momentum with the recovering economy.

Our industry is a large consumer of oil, naphtha and natural gas, which are widely used for energy production and as feedstock. With current economic conditions improving worldwide, global demand for oil is rising, leading to higher prices. Naphtha prices are also expected to rise in 2011 fueled by robust global crude prices.

According to the U.S. Energy Information Agency, natural gas inventories are expected to remain at or near record-high levels through most of 2011 with a small decline in consumption predicted.

Chemical companies have recently focused on their core business, tailoring their processes and structure toward becoming more efficient. Consequently, many companies have ended up with excess cash on their balance sheets, and some are seeing mergers and acquisitions as an option to grow in the current economic environment. There has been a substantial increase in the volume of business deals announced during 2010 compared to the previous year, which is a good indicator of economic stabilization.

The global economic recovery appears to be firmly in place. Industry analysts say that business conditions are improving, with corporate profits and investments on the rise and industrial production showing solid gains compared to last year. TCC President and CEO Hector Rivero said, “We are cautiously optimistic that the chemical industry will continue to produce steady growth over the next couple of years.”

ACIT Mid-Coast Region Hosts Luncheon with ABC in Freeport

Brazosport College President Millicent Valek (2nd from left) with representatives of ABC and ACIT

The ACIT Mid-Coast Region and Associated Builders & Contractors hosted a joint luncheon on February 16th at the RiverPlace Convention Center in Freeport. More than 130 attended the event, where guest speakers were TCC/ACIT President Hector Rivero and Jon Fisher, President of ABC Texas, who presented an overview of the 82nd Legislative Session. Brazosport College President Millicent Valek was a special guest and spoke to the group about the important role that Brazosport College plays in the region, providing post-secondary education and skills certification necessary for thousands of people who work in around industrial facilities in Brazoria County and across the state.   USA Environment, L.P. was an exhibitor sponsor for the event.

ACIT Mid-Coast Region’s Reverse Trade Show a Record Success

Nearly 500 registrants attended the February 24th ACIT Mid-Coast Reverse Trade Show held at the Lake Jackson Civic Center.  The company exhibitors included: Associated Builders & Contractors, BASF, BIC Alliance, Brazosport Safety Council, CDI Engineering Solutions, Chevron Phillips Chemical, Dow Chemical, Freeport LNG, Gulf Chemical & Metallurgical Corp., Infinity Construction Services, PICS, Psychemedics Corporation, S & B Engineers and Constructors, Shintech, SI Group, Texas City Safety Council, The Economic Development Alliance for Brazoria County, TIC Energy & Chemical, Inc., and Testengeer, Inc.
 
Thanks to our event sponsors:

Upcoming TCC & ACIT Events

March 8th  – Chemicals Day Legislative Dinner at Sullivan’s Restaurant in Austin, sponsored by The Mundy Companies.  Click here for details.

March 9th – TCC/ACIT Chemicals Day at the Texas State Capitol.  Click here for details.

April 6th – ACIT Mid Coast Economic Outlook Breakfast. Details to follow.

April 13th – ACIT South Texas Political Forum Luncheon. Details to follow.

April 21st – ACIT Houston Ship Channel Clay Shoot. Sponsorships available, click here.

May 12th – ACIT Houston Ship Channel Crawfish Boil. Details to follow.

June 6 -9 – TCC/ACIT EHS Seminar at Moody Gardens in Galveston.

Upcoming Member Events

For a listing of TCC & ACIT Member promotions and events, please click http://www.acit.org/categories/Events/Upcoming-Member-Events/.
(These events are not organized or endorsed by TCC or ACIT.)