2009 President’s Message: TCC Members Make Safety a Priority TCC & ACIT to Recognize Members at 2009 Awards Banquet Very Successful Legislative Session for Chemical Industry, Despite Legislature’s Political Infighting Texas Senate Confirms Dr. Bryan Shaw as TCEQ Commissioner  Reminder: TCEQ Toxicology Deadline for Public Comment – July 9th Water Fee Bill Signed By Governor ACIT Houston Ship Channel Boils Crawfish in Baytown Golfers Tee It Up at the ACIT Mid-Coast Tournament in Freeport Housing, Manufacturing Sectors See Recovery Ahead GM Bankruptcy to Cut US Chemical Demand Further Liveris: Dow Chemical on the Way Up Celanese CEO Says Chemical Demand Slowly Returning Rail Industry Petitions to Stop Moving Toxins Chemical Firms Shutter Production in Texas Upcoming TCC & ACIT Events   President’s Message: TCC Members Make Safety a Priority TCC President & CEO Hector Rivero Safety… it is a word that the chemical industry takes very seriously.  Workplace safety has long been a core value of chemical manufacturers in Texas and across the United States. Nationwide, the business of chemistry spends more than $2 billion per year improving health and safety practices for its employees.  As a result of these efforts, the illness and injury rates for the chemistry industry are one-quarter of the average rate for manufacturing, according to the Bureau of Labor Statistics. Workers in the chemistry industry are safer than those in retail, agriculture, food stores, and general merchandising.  In fact, chemical workers are much more likely to be injured away from work than on the job.  These statistics are rooted in rigorous safety protocols at chemical manufacturing facilities, ranging from worker training in emergency procedures to detailed recording of safety incidents. Since 1994, members of the American Chemistry Council (whose members must adhere to the Responsible Care® program as a condition of membership) have reduced their days away from work rate by 55 percent.  And these companies have reduced their occupational injury and illness incidence rates by 66 percent since 1990. Responsible Care® is the chemical industry’s voluntary initiative in which companies work together to continuously improve their health, safety and environmental performance, and to communicate with stakeholders about their products and processes. Through this program, the business of chemistry has achieved continual progress in improving workplace safety, largely as a result of eliminating job hazards and the industry’s implementation of effective safety programs. While there is no regulatory requirement to collect data on company contractor incidence rates, this information was collected for the first time in 2003.  Contractors have improved their safety rate 22 percent in that short time period, and the data shows that since 2005, their days away from work rate have been reduced by 25 percent. Alliance with OSHA  The Occupational Safety and Health Administration (OSHA) and the Texas Chemical Council (TCC) have entered into an alliance because both recognize the value of establishing a collaborative relationship to cultivate healthy and safe American workplaces.    OSHA and TCC feel that this Alliance will provide TCC members and others information, guidance and access to training resources that will assist them to protect employees’ health and safety, particularly in reducing and preventing hazards related to Process Safety Management. In developing this Alliance, OSHA and TCC recognize that the OSHA’s State Plan and Consultation Project partners and an integral component of the OSHA national effort. TCC/ACIT Premiere EHS Seminar Next week (June 8-11), the Texas Chemical Council and the Association of Chemical Industry of Texas will host the TCC/ACIT Environmental Health and Safety (EHS) Seminar at Moody Gardens Resort in Galveston.  The EHS Seminar – which is expected to attract more than 500 environment, health and safety professionals – is the premiere educational seminar for the chemical and refining industry in Texas.  This seminar is designed to provide knowledge to foster personal growth of attendees and improve the performance of their organizations. The Seminar is oriented toward plant managers, production and maintenance supervisors, operators, and technicians, safety professionals and industrial hygienists, occupational health practitioners, environmental professionals, safety team members, contractors, service providers and others. For more information about the TCC/ACIT EHS Seminar click here. TCC & ACIT to Recognize Members at 2009 Awards Banquet At the TCC/ACIT Awards Banquet on June 11th, the chemical industry will recognize TCC member companies who have demonstrated commitment and exemplary results toward safe operations throughout the previous year.  Awards in this category recognize Occupational Safety Distinguished Service, Zero Incident Rate, and the Best in Texas. In addition, the A.D. Cyphers Safety Professional of the Year Award and the Gerald R. Ehrman Leadership in Safety Management Award are presented to deserving individuals demonstrating outstanding service and leadership in safety. ACIT will recognize their Member of the Year from each of the four active regions across the state.  These members demonstrate outstanding service and leadership to ACIT in their respective regions. For more information about the TCC/ACIT 2009 Awards Banquet click here. The chemical industry is proud of its workplace safety record and continues to strive for a zero incident rate across the industry through its education and sharing of best practices.  After all, safety doesn’t happen by accident! Very Successful 81st Legislative Session for Chemical Industry, Despite Legislature’s Political Infighting The Texas Legislature adjourned on Monday, June 1st, ending a long and difficult session with much left undone.  However, the Texas Chemical Council (TCC) had a very successful session. “TCC thanks its member companies and members of the Advocacy Committee for all their hard work throughout the legislative session,” stated TCC President Hector Rivero.  “With our members’ support, we have organized the most effective lobby team in Austin and effectively engaged the grassroots of our industry across the state.  Through hard work and perseverance, we had a very successful session and protected the interest of the chemical industry in Texas.” In the closing weeks of session, House Democrats prevented a vote on the highly politicized voter ID bill by using the House rules to debate (or “chub”) the Friday, May 22nd Local and Consent Calendar over a 5-day period.  As a result, the House was bottlenecked and was never able to consider bills on the Major State Calendar related to voter ID, eminent domain, air quality, and the Texas Department of Insurance sunset bill before the May 26th deadline.  This procedural tactic by the House Democrats also created a stir across the Capitol as Senators scrambled to attach their legislation to House bills that were being considered in the Senate on the final days.  So, the final days of the session were spent determining the germaneness of Senate amendments that were added to House bills.  Senate amendments added to House bills that were not germane to the original purpose of the bill were eventually stripped off. TCC will issue a complete, detailed report of the 2009 Texas legislative session after Governor Rick Perry’s 20-day veto period expires.  But the following are a few highlights: Civil Justice Plaintiff attorneys were very aggressive in their attempts to roll back the tort reform gains of previous sessions.  Fortunately, every bad civil justice bill was defeated by a strong coalition of companies, business trade associations, and tort reform groups.  Bills defeated include: Entergy - Would have reversed the Supreme Court’s Entergy v. Summers decision preventing premise owners from serving as their own general contractor and providing workers' compensation insurance for all workers at a jobsite;  Mesothelioma - Would have lowered the causation standard for mesothelioma cases to any exposure for purposes of naming defendants;  Paid or Incurred - Would have allowed plaintiff attorneys to sue for phantom damages for health care costs; Arbitration – Would have eliminated arbitration provisions from being included in contracts between two entities. Indemnification – Would have banned indemnity provisions in some construction contracts Qui Tam - Would have allowed attorneys to act as bounty hunters and seek out litigation on behalf of the state, but not by the state. Taxes TCC lobbyists spent the last several weeks reviving three big tax provisions: extension of Chapters 312 and 313 of the Tax Code, and an important clarification to protect “Prop 2” exemptions for pollution control equipment.  Chapters 312 and 313 are part of the Texas Economic Development Act which authorize local governments [312] and school districts [313] the ability to give tax abatements for capital investment projects.  After much debate, agreements were finally reached on legislation for both Chapter 312 and 313.  We also successfully negotiated an agreement to preserve Proposition 2 tax exemptions for pollution-control equipment, which was being threatened by mismanagement of exemptions for non-pollution-control equipment. Environment Thanks to TCC’s leadership, we were successful in passing a bill that clarifies discrepancies between state (TCEQ) and federal (OSHA) enforcement, with safety being a key component in expanding TCEQ’s enforcement discretion.  Additionally, no harmful environmental bills passed the Legislature this session, despite numerous attempts including: a cumulative effects analysis in air permitting; air pollutant watch list expansions; toxic hotspots; economic benefit of noncompliance in administrative penalties; nuisance regulations; and various climate change bills aimed at greenhouse gas emissions reductions and carbon dioxide registries.  Key Texas Emissions Reduction Plan (TERP) provisions supported by industry did pass in the final days of session.   Energy Despite huge efforts to pass along a new non-wind 1500 MW renewable portfolio standard (solar and biomass), TCC helped kill mandate bills that would have cost residential, commercial and industrial consumers millions in increased costs each year.  Industry lobbyists helped pass a bill targeting Entergy Gulf States Utilities in southeast Texas, allowing for four more years of electricity market status quo, but industrials with co-generation can take advantage of a competitive generation tariff to sell excess power to the grid. Workforce Development TCC and its industry partners had a major accomplishment in helping prepare high school students for skilled jobs through career and technical education (CTE).  Under the newly adopted provisions, school districts have the flexibility to offer applied CTE math and science courses for all four years of high school (as long as the courses meet state standards), not just after Algebra II and Physics, which is current law. And students have more flexibility on electives, including six unencumbered electives providing capacity for more CTE classes to be taken by students.  The bill also calls for an expedited course review process (180 days) by the Texas Education Agency and the State Board of Education for CTE courses submitted by school districts, and there is new funding from the state for school districts who innovate and develop CTE classes that meet math or science credits and have dual enrollment articulation with community and junior colleges. Site Security and Safety For the second session in a row, the legislation designed to allow concealed-carry permit holders the ability to bring their gun to work and stored in their car in the parking lot, was defeated. In the event that the “guns in parking lots” legislation did pass, TCC had again successfully negotiated a compromise with the National Rifle Association (NRA) to exempt most chemical facilities from the requirement. Texas Senate Confirms Dr. Bryan Shaw as TCEQ Commissioner TCEQ Commissioner Dr. Bryan Shaw The Texas Senate voted to confirm the nomination of Dr. Bryan Shaw to serve as Commissioner of the Texas Commission on Environmental Quality (TCEQ). Gov. Rick Perry appointed Commissioner Shaw to the three-member Commission on November 1, 2007.  Now confirmed, Commissioner Shaw’s term runs through August 31, 2013. “Commissioner Shaw has proven to be a very competent and qualified leader at the TCEQ,” said TCC President & CEO Hector Rivero. “Commissioner Shaw has effectively drawn on his engineering and air quality expertise to fairly execute his duties as Commissioner.” “TCC congratulates Commissioner Shaw and the TCEQ on his confirmation.  We look forward to working with Commissioner Shaw throughout his term as TCEQ Commissioner,” Rivero said. Reminder: TCEQ Toxicology Deadline for Public Comment - July 9th The TCEQ Toxicology Division is accepting comments until July 9, 2009, on the proposed development support documents (DSDs) and Interim Guidelines for Setting Odor-Based Effects Screening Levels (ESLs).  A proposed DSD is published at the TCEQ web site for a 60-day public review and comment period.  After public comments are received, the Toxicology Division will address and resolve all relevant issues and make scientifically defensible changes to the DSD and toxicity values, if needed. The list of chemicals under consideration is listed below: chromium III hydrogen chloride hydrogen fluoride methacrolein Interim Guidelines for Setting Odor-Based ESLs The final DSDs with a Response to Comments, if applicable, will be published on the TCEQ website.  TCC is developing comments on the proposed documents, and will be seeking input from member companies. If you have any questions or need additional information, please contact Mike McMullen at (512) 646-6404 or via email at mmcmullen@txchemcouncil.org. Water Fee Bill Signed By Governor Rep. Eddie Lucio III (D-San Benito) On May 26th, Governor Rick Perry signed HB 1433 (by Eddie Lucio III, D-San Benito) into law, which raises the statutory cap for the annual water quality fee for wastewater discharge permit holders and water right users through permit or contract from $75,000 to $100,000.  In subsequent years, the statutory limit will increase based on the Consumer Price Index (CPI) until it reaches a maximum of $150,000.   The legislation passed in response to a TCEQ proposal to increase select water-related fees due to the decline in general revenue appropriated to the TCEQ’s water program activities.  TCEQ’s current revenue estimates for Account 153 (the Water Resource Management Account) reveal that there are insufficient funds for the Commission to cover the costs of its water programs in fiscal year 2010 - 2011. There are three specific fees that are included in the rule proposal: Consolidated Water Quality (CWQ) Public Health Service (PHS) Water Use Assessment (WUF) On April 13th, TCC submitted comments on the proposed rule stating that if the statutory limit is increased, a phased implementation approach should be used to graduate towards the revised statutory limit so that such a large increase does not occur in a single billing cycle.  Especially for those facilities on a calendar fiscal year, such an increase represents a significant challenge in the current economic climate.   ACIT Houston Ship Channel Boils Crawfish in Baytown More than 140 people attended the ACIT Houston Ship Channel Crawfish Boil on May 28th at Bridgewater in Baytown.  Several new members joined ACIT at the event, and sponsors included:  Bridgewater DeLane’s Ad Specialties Industrial Safety Training Council – Baytown Quorum Compensation Group The Mundy Companies William Grant Tank & Vessell, Inc.   Golfers Tee It Up at the ACIT Mid-Coast Tournament in Freeport ACIT and TCC members held the Mid Coast Golf Tournament on May 29th at Columbia Lakes Golf Course in West Columbia.  The outing brought 134 players and 23 sponsors, and raised more than $4,000 for FREEPAC, the TCC/ACIT political action committee. Sponsors were:   ACIT Mid Coast Gof Tournement Winners: (L-R) George Martinez, Kevin Welch, Mike Beckman  and Tim Tobin Nalco Tower Performance of Texas Brand Industrial Solutions AXion Logistics                   Brevard Reliable Turnaround Services Cat-Spec Limited Testronics Gulf States, Inc. CDI Engineering Modular Process Control P.A., Inc. ENGlobal Engineering BASF GHX Industrial, Inc. The Mundy Companies The Eads Company Ref-Chem Dow Chemical Austin Industrial Aggregate Technologies Kmac Specialty Services LISCO Valve We extend a big thanks to the ACIT Mid-Coast Planning Committee responsible for coordinating the tournament: Marinell Music, Erica Petersen, Mike Beckman, Rick Kaufman, Chris Cloninger, Steve Hawley, Tony Mize, Jack Murphy and Buck Blevins.   Housing, Manufacturing Sectors See Recovery Ahead  U.S. home builders and manufacturers have expressed greater confidence that the recession is near bottom and the nation will experience a slow recovery beginning as early as late this year, which is a positive indicator for U.S. chemical manufacturers as both sectors are crucial downstream consuming industries for a wide variety of chemicals, resins and derivative products. The National Association of Home Builders (NAHB) said its measure of contractor confidence in the housing market improved for the second consecutive month in May. In cooperation with Wells Fargo Bank, NAHB tracks builder confidence in the housing market index (HMI), which rose two points in May to 16 and followed a five-point improvement in April.  The HMI reading of 16 is double what it was at its all-time low of 8 in January this year.  However, the measure of builder confidence is still far below the HMI high mark of 72 recorded in June 2005 at the peak of the U.S. housing boom. “This continued increase [in builder confidence] indicates that home builders feel we’re at or near the bottom of the market and that positive signs lie ahead for builders and potential home buyers,” said NAHB chairman Joe Robson. In the broader US production sector, the Manufacturers Alliance said that while the nation continues to work through the worst recession since World War II, “a negative near-term outlook may finally give way to a gradual recovery in late 2009 and in 2010.” Daniel Meckstroth, chief economist for the alliance, said: “Fortunately, we are starting to see signs of economic conditions beginning to stabilize.” In its regular quarterly economic outlook, the alliance said it expects this year will show a 2.9% decline in US gross domestic production (GDP) but that business will begin to improve at year end and produce a weak but positive GDP expansion of 1.9% in 2010. Although the anticipated recovery will be sluggish and unemployment will continue high into 2010, “there are nonetheless inklings of a future firming economy,” Meckstroth said.  He said he expects the US manufacturing sector to see another rough period this year with output down by nearly 12% compared with 2008, but the overall production industry is expected to experience recovery growth of 2.1% in 2010. GM Bankruptcy to Cut US Chemical Demand Further The bankruptcy filing by General Motors will further depress chemical demand from the ailing US auto sector even though the move was widely expected and the company's operation would continue, according to analysts. On June 1st, GM filed for Chapter 11 protection from its creditors because bondholders who are owed around $27 billion refused an offer to swap their holdings for equity in a deal in which the federal government and the auto-workers' union get far bigger slices of the company. The government had previously set a deadline for GM to restructure itself as a condition for billions of dollars it has loaned the company.  The blow to the emerging recovery in consumer confidence that would follow GM following Chrysler into bankruptcy would shrink US auto sales and cause GM and possibly other firms to wind back production plans even more drastically than already slated, analysts said.   Liveris: Dow Chemical on the Way Up Despite a forced deal, Dow Chemical Company boss Andrew Liveris says the company now has what it longed for: agility. In April, Dow learned it had no legal grounds to delay a $16 billion acquisition of Rohm & Haas of Philadelphia, despite the president, chairman and chief executive officer’s earlier pleas that the move was difficult in light of the global financial meltdown and the failure of a joint venture with Petrochemical Industries Co. of Kuwait. Liveris has said Rohm & Haas will help transform the Midland company into a specialty chemicals superstar, one that is not so prone to cyclical pressures.  Specialty chemicals are found in electronics, building materials and medicines. “We have the portfolio we've always wanted,” Liveris said during the annual meeting – “a Dow that is two-thirds specialty in revenue and where three out of four divisions are run as true market-driven technology-rich divisions with accountable and focused leadership.” To make the acquisition work, Liveris and his executive team cut Dow's debt by shedding its calcium chloride business to a chemical industry buyer.  One of the fruits of divestitures is the chemical giant posting a surprising first-quarter profit, which has sent its stock soaring.  Dow's shares have about doubled to near $20 a share.   Celanese CEO Says Chemical Demand Slowly Returning Demand for chemical products is slowly returning but likely will take some time to regain pre-recession levels, according to David Weidman the chairman and chief executive of Celanese Corp. The chemical industry saw interest in its products – which help make thousands of everyday items including cars, cell phones and clothes - drop over the past year as consumers severely cut spending.  That sharply eroded earnings at Celanese as well as industry peers. However, sales have slowly improved since the end of 2008.  “The first quarter was better than the fourth quarter was, and the second quarter is shaping up to be better than the first quarter,” Weidman said on the sidelines of the company's investor day in New York. The Dallas-based company posted a $20 million loss for the first quarter, citing declining demand, as well as charges for employee-termination benefits, plant closures and insurance recoveries. Weidman said the company expects “the second half of the year to be better than the first half.”   Rail Industry Petioins to Stop Moving Toxins Railroad companies are pressing federal regulators to cut back on trains carrying hazardous materials through urban areas, saying they fear a catastrophic release of toxic chemicals in a large city. The companies also fear billions in legal claims if toxic materials spill during a derailment or act of sabotage.  Rail industry associations are petitioning to allow railroads for the first time to refuse to carry chemicals such as chlorine over long distances. Federal law requires railroads to transport such materials, which are used in manufacturing, agriculture and water treatment.  The companies' move is opposed by the Obama administration and others who say railroads are the safest way to move toxic materials. If trucks end up carrying materials that railroads reject, “that would pose a much greater danger,” said Patricia Abbate of Citizens for Rail Safety.   Chemical Firms Shutter Production in Texas LyondellBasell Industries and Hexion Specialty Chemicals are both curtailing chemical production in the face of weak demand. LyondellBasell, which filed for bankruptcy protection of its U.S. subsidiaries in January, is closing a 480 million-lb-per-year high-density polyethylene plant in Chocolate Bayou, Texas, by the end of July. The company will lay off about 50 workers that ran the unit. In March, the company closed an ethylene cracker complex on a nearby site in Chocolate Bayou.  Vaughn Deasy, LyondellBasell's senior vice president of base chemicals and polyethylene, blames excess capacity and poor profits in the company's polyethylene business for the latest decision. “In the current market environment, with declining demand for polyethylene in the United States and diminishing export opportunities due to the expansion of global capacity, we are taking steps to rationalize capacity,” Deasy said. LyondellBasell earlier closed low-density polyethylene (LDPE) units in Pasadena, Texas, and Fos-sur-Mer, France.  And the company hasn't been alone in closing polyethylene capacity.  Flint Hills Resources, the chemical and refining arm of Koch Industries, is shuttering an LDPE plant in Odessa, Texas, and Dow Chemical has closed an LDPE unit in Freeport, Texas. Separately, Hexion says it will indefinitely idle a 190 million-lb-per-year bisphenol-A (BPA) plant in Deer Park, Texas.  BPA is used to make epoxy resins, a major product line for Hexion, and polycarbonate.  At the same time, the company is bringing a 310 million-lb-per-year BPA plant back online after it was down for maintenance. “Continued soft demand for BPA as a result of the general economic downturn makes this a necessary move that will further improve the economics of our Deer Park complex,” says Ian Harris, vice president of base resins for Hexion.   Upcoming TCC & ACIT Events June 8 to 11 – TCC/ACIT Environment, Health & Safety Seminar at Moody Gardens, Galveston.  Click here for more information. June 11 – TCC/ACIT Awards Banquet at Moody Gardens, Galveston. Click here for more infornatuin. June 25 – The East Harris County Manufacturers Association (EHCMA) have invited ACIT to join them for their Quarterly Membership Breakfast Meeting to be held on June 25 at Bay Oaks Country Club in Houston.  To register click here.  June 26 – ACIT Golden Triangle Golf Tournament will be held on June 26 at Bayou Din Golf Course in Beaumont.  The registration fee to play is only $75 per player!  There are also many sponsorship opportunities.  To view sponsorship opportunities or to register, click here.  July 23 – ACIT Houston Ship Channel is hosting a dinner cruise on July 23 on the FantaSea Yacht Charters in League City.  The registration fee of $125 includes dinner and unlimited beverages.  To register click here.