October 2010


President’s Message: 2010 Election… Get Informed, Get Involved & Vote
TCC President & CEO
Hector L. Rivero
“Now more than ever the people are responsible for the character of their Congress. If that body be ignorant, reckless, and corrupt, it is because the people tolerate ignorance, recklessness, and corruption.”  - President James Garfield

Those words uttered more than 130 years ago by President James Garfield have as much meaning today as they did back then. The wisdom of demanding accountability by participating in elections resonates in any context, and any time period.

Our country’s next election is about one month away, and I encourage all Texans to fully participate in the electoral process.

By fully participating, citizens should become educated about the issues that affect their lives and support those candidates who best represent their interests; and most important, all Texas citizens should vote.

Citizens and organized groups who actively participate in the political process will determine the future direction of our political system.

It is important that those whose livelihoods depend on the chemical industry get involved and ensure that your business interests are represented in the state capitol, our nation’s capitol, and in the city halls and courthouses where important decisions are made that impact our industry’s viability.

When there is a fair and equitable tax system and regulatory environment, businesses can grow and be successful. Conversely, when unfavorable conditions exist, our economic future can be uncertain at best.

First, get to know the candidates running for office at the local, state and federal levels. Make an effort to meet these candidates, let them know who you are, and educate them about your company, your business, and the challenges that your business faces every day.

Do they understand your business and value the jobs and economic impact that your business makes in your community and to the state?

Next, support those candidate(s) who understand your concerns and share your views.  Contribute some time and money to those candidates.  Volunteer to assist their campaigns by working the phones, distributing yard signs, bumper stickers and campaign literature. Encourage your friends and family to support your candidate(s) of choice. You can also block walk in your community to encourage your neighbors to support your candidate.

Finally, and most important, VOTE! Your vote is your voice in the political process. 

The ability to vote exists as one of the most cherished Constitutional Rights that many Americans have fought and died for throughout our nation’s history.  By not voting, you are allowing others to determine the outcome of the elections and elect those who will make laws that impact your livelihood for years to come.

The importance of voting cannot be overstated.  The entire structure of our government is based on citizens voting to determine their representation, yet most presidential elections are decided by less than 70% of the eligible voting public.  Even fewer people vote in mid-term and local elections.

Each one of us has a stake in the public policies that govern our lives, our companies and our industry. With your vote, you can impact legislative and regulatory policies that determine your company’s success and affect those who depend on your company for their livelihoods.

You can make a difference this election. Get informed, get involved and, most importantly, vote.

Here are a few important dates to be aware of in this general election cycle in the State of Texas:

Vote Early:  Early voting begins on Monday, October 18th, and continues through Friday, October 29th.  Hours for early voting will vary depending on the polling location.  Check with your County Clerk’s office for details on location and hours open.

Vote on Election Day:  The election will be held on Tuesday, November 2nd.  The polls open at 7:00 a.m., and close at 7:00 p.m.

Texas House Committee Members Defend Businesses, Criticize EPA


Texas lawmakers rebuked the Environmental Protection Agency (EPA) Region 6 Administrator last week in a contentious hearing that brought the tug of war between state and federal officials over pollution permits to the state Capitol for the first time.

At the September 30th hearing of the House Environmental Regulations Committee, state lawmakers criticized the EPA and environmental groups’ claims that Texas is flouting the federal Clean Air Act.

The EPA has objected to flexible (flex) permits issued to 130 plants in Texas that emissions caps for facility facility’s minor sources, instead of requiring each unit at a facility to have individual emissions limitations.

Committee members vigorously defended businesses, pointing out that the state’s air quality has improved in recent years. Lawmakers pointed out that EPA’s proposed changes in permitting requirements could not come at a worse time during the national economic recession.  They stated that EPA’s actions will lead to uncertainty for Texas businesses, stymie economic investment and result in further job losses with little, if any, improvement to the state’s air quality.

But EPA Regional Administrator Al Armendariz, who oversees Texas, Louisiana, Oklahoma, Arkansas and New Mexico, said he wants to bring the state into compliance with federal law, which means ending the state’s flex permit programs.

Dr. Al Armendariz
EPA Region 6 Administrator


“That’s my only objective – to get these flex permit holders good permits issued by the [state],” he said.

Committee Chairman Byron Cook of Corsicana, questioned whether eliminating flex permits is the only way to solve the problem. He suggested that the federal government was trying to seize control over the Texas Commission on Environmental Quality (TCEQ).

Armendariz countered that the EPA never approved flex permits and they do not comply with the federal Clean Air Act. “We've got to follow the rules,” Armendariz said.

Armendariz said companies that circumvented the Clean Air Act through the flex permit structure could be subject to penalties.

Some lawmakers question why the EPA was only now objecting to the flex permit program, which started in 1994. Armendariz said the EPA sent several warnings to Texas during the Bush administration and is now taking action.

Rep. Randy Weber of Pearland said that the EPA’s slow reaction has probably helped the state maintain its economy and improve air quality.

But Armendariz said that any improvements were despite the flex permit program and came through such federal initiatives as tighter car emission standards.

TCEQ Chairman Bryan Shaw said the EPA’s recent disapproval of its air programs is hampering the agency from reaching its goal to further reduce air pollution.

Shaw disputed Armendariz’s assertions that the federal Clean Air Act requires individual permits for individual units and questioned how eliminating flex permit program will lead to further reductions. Asked by a committee member what positive effect ditching the program would have, Shaw replied: “It will be zero.”

EPA Unveils Voluntary Audit Program for Flexible Permit Holders; Industry Comments


Last month the U.S. Environmental Protection Agency (EPA) unveiled what it calls a voluntary audit program for Texas facilities that hold flexible (flex) permits for air quality to ensure that their emissions are in compliance with the federal Clean Air Act.

EPA Region 6 Administrator Al Armendariz said he wants to give the state’s 130 holders of flex permits – which he insists do not comply with the federal Clean Air Act – an opportunity to come into compliance and gain what he called “regulatory clarity” so they can operate without the threat of punitive sanctions from the EPA.

“The advantage for the companies is that they receive the regulatory clarity that they’ve been seeking, and the advantage for people who live near these facilities is that they can be assured that public health is being protected,” Armendariz said.

Since Armendariz became Region 6 Administrator earlier this year, EPA has challenged several Texas air programs, but the battle has come to a head since the State of Texas and several state and national business organizations filed suit against EPA challenging its disapproval of the Texas Flexible Permit program.

Under the EPA’s Voluntary Audit Program announced September 21st, an outside auditor would conduct an independent review of a permit-holder’s operations along with any modifications or permitting activities that have occurred since the permit was issued. EPA indicates that this process is necessary before businesses can obtain “good” permits that meet federal law.

“A company would enter into a Consent Agreement and Final Order with EPA based on the findings of the third-party audit,” the agency said in its announcement. “This audit program and CAFO would resolve any New Source Review non-compliance issues that occurred while operating with the Flexible Permit provided that the companies complete the audit program.”

“Although we have not reviewed the details of the EPA's audit program, we believe individual companies will have to judge for themselves whether or not this is a viable option,” said TCEQ spokeswoman Andrea Morrow. “The state of Texas vigorously defends its Flexible Permits program and expects to prevail in court. Flexible permits are legal and effective.”

Many feel the audit process is more of a fishing expedition than a reasonable effort to ensure compliance. And while EPA says it will offer voluntary participants “a covenant from civil enforcement by the federal government,” many are concerned that participation in this process will instead provide Non-Government Organizations (NGOs) and private individuals with a means to file citizen suits against companies who have been operating in compliance with state and federal environmental laws.

Meanwhile, the EPA and the Texas Commission on Environmental Quality (TCEQ) continue to negotiate on an alternative that addresses the EPA’s concerns.

On September 16th, EPA proposed another option for those companies that choose to “de-flex” their flex permits.  The process involves using TCEQ’s current rules to transition from a flex permit to a New Source Review (NSR) State Implementation Plan (SIP)-approved permit.  On September 30th, the Texas Chemical Council and three other trade associations (Texas Oil & Gas Association, Texas Association of Business and Texas Associations of Manufacturers) sent comments to EPA regarding the draft process of transitioning Flexible Permits to NSR SIP-Approved Permits.  The comments can be found here: Comments.  EPA has not indicated a timeframe for finalizing this alternate proposal.

Projected State Budget Shortfall Could be $21 billion


The working estimate of the looming state budget shortfall has grown to about $21 billion in the face of smaller-than-expected tax revenues and projected higher costs for education and health care, according to legislative staff. Previous estimates topped out at about $18 billion for the upcoming two-year budget period.
Dale Craymer

“There are a lot of moving parts to the budget, and unfortunately, a lot of them are moving in the wrong direction,” budget expert Dale Craymer, President of the Texas Taxpayers and Research Association, said of the new estimate.

The latest estimate from legislative budget staff comes after the state closed the books on the 2010 fiscal year Aug. 31. Tax collections dampened by the recession are about $1 billion worse than anticipated, according to figures discussed by staff.

Another $2 billion of the shortfall estimate is tied to new projections for growth in areas such as public school enrollment, Medicaid caseloads and higher health care costs for prisoners, government employees and retirees. Staff called the figure a rolling estimate.

The size of the shortfall has been a moving target. Earlier this year, the gap was estimated to be at least $11 billion.

In May, House Appropriations Committee Chairman Jim Pitts, R-Waxahachie, projected that the shortfall could be as much as $18 billion. GOP state Comptroller Susan Combs is scheduled to make a formal revenue estimate in January, when lawmakers convene.

Perry spokesman Mark Miner questioned the new $21 billion figure. “Where did that number come from?” he said. “As the governor has said, the official number will come from the comptroller.”

Senate Finance Committee Chairman Steve Ogden, R-Bryan, took issue with the $21 billion estimate. He said the figure “takes into account about 15 assumptions, all of which may not be right.” Ogden acknowledged a “structural deficit” of $10 billion to $11 billion, his tally for one-time fund balances and stimulus money used to fund the current budget.

For example, when asked whether the state must give more money to schools to cover increased enrollment, Ogden said, “You'd like to, but you don't have to. ... We'll certainly look for every way to avoid any type of cuts to public education, because it’s that important. But stay tuned.”

Rep. Richard Raymond, a Democrat from Laredo who is vice-chairman of the House Appropriations Committee, said he has suggested to Pitts that the budget-writing committee start hearings right after the election.

Committees already have been at work during the interim. House Speaker Joe Straus appeared before Pitts’ committee in May to call for lawmakers to close the budget gap without new taxes while suggesting that “significant cuts” will be needed.

The shortfall estimate includes the use of one-time sources to balance the current budget. It also assumes revenue coming in shy of predictions and a need to cover growth in public school enrollment and health care.

The state faces continuing pressure from a decision to take on more of the cost of public education by lowering local school property tax rates without raising state taxes enough to cover the expense.

Lawmakers have a rainy day fund that's estimated to have $8.2 billion next year, but it takes a super-majority (100 member) vote to spend the money.

Mike McMullen to Leave TCC in November
 
Mike McMullen

TCC Regulatory Affairs Director Mike McMullen will be leaving TCC in November. McMullen will be pursuing new consulting opportunities later this year.

“Mike has been an invaluable member of our TCC team,” said TCC President Hector Rivero.   “He has successfully represented TCC at the TCEQ and at the State Capitol. We will miss Mike a great deal and wish him and his family all the best!”

Mike and his wife, Becca, recently gave birth to their second child, which factored into Mike’s decision to change fields and pursue a career which will allow him to spend more time with his family. Mike has served as Director of Regulatory Affairs for TCC since 2007.

Mike has been actively involved in helping us recruit his successor and will stay on through the end of October to assist with the transition for his replacement. TCC hopes to announce his successor very soon.

Please join us in thanking Mike for his service to TCC and wish him success in his new endeavor!

Texas Hammers EPA on Science of Global Warming


Essentially putting global warming science on trial, Texas officials have expanded their arguments in a lawsuit meant to prevent the federal regulation of greenhouse gases.
Attorney General
Greg Abbott

In motions submitted last month to the U.S. Court of Appeals for the D.C. Circuit, Texas Attorney General Greg Abbott accused the federal Environmental Protection Agency of relying on faulty science for its proposals to regulate greenhouse gases.

The briefs build on a federal suit filed in February by Texas and other states against the EPA, which in December issued an endangerment finding that carbon dioxide emissions threaten the public health and welfare of current and future generations.

The endangerment finding, which opens the way to further regulations, spun out of a 2007 U.S. Supreme Court ruling that the EPA had the authority to regulate greenhouse gases.

The EPA said its scientific conclusions were based on work by three groups: the U.S. Global Climate Research Program, the United Nations’ Intergovernmental Panel on Climate Change and the National Research Council, which synthesize thousands of studies to convey a consensus on what scientific literature shows about climate, according to the agency.

In February, Abbott said that in relying on the U.N. panel’s data, the EPA “outsourced the scientific basis for its greenhouse gas regulation to a scandal-plagued international organization that cannot be considered objective or trustworthy.”

Abbott drew attention to claims that scientists for the U.N. panel from at least two universities – East Anglia University in England and Penn State University – had suppressed or falsified data that could undermine global warming science.

“By delegating its judgment on climate science to the (U.N. group) and others, EPA exposed its conclusions to the errors and biases of unaccountable volunteer scientists, and undermined the validity of the endangerment finding,” reads a brief filed by the Texas attorney general’s office.

The state is challenging proposals to limit emissions of greenhouse gases from light-duty-vehicle tailpipes and large industrial facilities. Abbott and Gov. Rick Perry have said greenhouse gas rules could cripple the Texas economy.

Kerry: Politics Led to Climate Bill Demise
 
Senator John Kerry


Massachusetts Sen. John Kerry blamed politics in the U.S. for the demise of climate change legislation in the Congress.

Kerry lamented what he said was a “huge lost economic opportunity” passed up by lawmakers after they failed to pass an energy and climate bill before breaking to go home for the campaigns.

“It’s because of the simplistic approach of the political process that has reduced climate changes to cap and tax,” Kerry said. “The fact of the matter is that the United States is losing unbelievable economic opportunity.”

Kerry had led the effort, along with Sens. Joe Lieberman (I-Connecticut) and Lindsey Graham (R-South Carolina), to craft a compromise energy and climate bill earlier this year. Those talks fell apart after Graham withdrew and blamed Majority Leader Harry Reid (D-Nevada) for trying to push an immigration bill before an energy and climate bill.

The collapse of talks eventually prompted Reid to introduce a drastically scaled-back energy bill in July, a bill which he failed to bring up before the August recess and again before lawmakers left for their month-long break to campaign before November 2nd elections. The bill could be brought up during a lame-duck session of Congress, but it’s still not clear if it would have the votes to move forward.

Kerry has previously chastised inattentive voters for contributing to deteriorating politics. “We have an electorate that doesn’t always pay that much attention to what’s going on so people are influenced by a simple slogan rather than the facts or the truth or what’s happening," Kerry said.

Conservatives seized on that remark, accusing the 2004 presidential candidate of looking down on voters. Kerry said that the U.S. had hurt itself economically by way of the senatorial indecision.

Meanwhile, Sen. Jay Rockefeller (D-West Virginia) acknowledged that his plan to delay EPA climate regulations for two years could not get past a promised presidential veto.

“The president will probably veto it and so it wouldn’t have any force,” he told reporters in the Capitol. But, he added, “The point is the message.”

Rockefeller has claimed he can get 60 votes for his two-year delay, enough to get past a filibuster. But that would still be short of the two-thirds support needed to overcome a White House veto. And even getting that far would require the Democratic House – led by Speaker Nancy Pelosi, who has made aggressive climate policies a flagship issue – to take up the measure this year.

Regardless of the seemingly insurmountable odds, Rockefeller said he does not want to wait until next year for a vote on his two-year delay. “I don’t want to … take that approach and I particularly don’t want to be seen or appear to be thinking about that approach to my Democratic colleagues,” he said.

Rockefeller has said that Majority Leader Reid privately assured him there will be a vote on his two-year delay during a lame-duck session, though he noted Wednesday that senators want a lot of things from Reid during that post-election period.

But when asked whether an EPA vote is unlikely given other legislative priorities, Rockefeller said, “I don’t take that point of view. Anything can happen.”

Rockefeller acknowledged he ruffled feathers in the liberal wing of the party when he admitted during the healthcare debate that a “hardcore” version of the public option he initially championed was not politically feasible. “I gotta deal in the world of the possible,” he said.

President Obama said one of his top priorities next year is to push for an energy policy, though he did not give specifics for what the legislation would include.

Cooler Weather May End Hurricane Threats for Gulf Chemicals


Recent cold fronts moving south over the U.S. could signal an end to 2010 hurricane threats for the chemical and oil-producing region of the Gulf – the area along the Texas, Louisiana and Mississippi coasts.

Storms are less likely to target that area based on wind shifts associated with frontal boundaries, said Frank Billingsley, chief forecaster with Houston television station KPRC. After these cold fronts plunge into the Gulf, he said, any subsequent storms in the area would likely be pushed away.

“As those first fall fronts move through, that is a sign that the Westerlies are kicking in,” Billingsley said. “Those are the strong west winds off of the Rocky Mountains that drive cooler air in our direction. More importantly, that westerly and even southwesterly upper-level wind flow can steer hurricanes in the Gulf away from us and toward the eastern states, like Florida,” he added.

Milder weather would likely cool water temperatures in the region, zapping the energy source needed for strong storms.

Hurricanes can disrupt the North American petrochemical industry, since oil and gas production is concentrated in the Gulf of Mexico and much of the country’s plants are on the U.S. Gulf coast. Hurricane season officially lasts through November 30th, but the peak of the US season is from mid-August until about the first week of October.

Storms in October and November typically take aim at southern regions, such as Caribbean islands and Mexico. In those locations, water temperatures are higher and cold fronts rarely influence wind patterns. As a result, the hurricane threat remains active for Mexican producers and logistics operations, which have been under siege from hurricanes Alex and Karl and Tropical Storm Hermine.

Meteorologists predicted an active Atlantic storm season in 2010, and the season has delivered after a slow start. The season has brought 12 named storms, with six growing into hurricanes (winds at least 74 miles/hour) and five into major hurricanes (winds at least 111 miles/hour).

An average season has 11 named storms and two major hurricanes, according to the NHC. However, storms have been more active in the eastern Atlantic than in the Gulf, with a majority of systems remaining at sea before dissipating. That trend has largely spared US producers, and it appears likely to continue that way for the remainder of 2010.

Texas Manufacturing Picks Up and Outlook Improves


Texas factory activity rose slightly in September, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index – a key measure of state manufacturing conditions – edged back into positive territory following a reading near zero in August.

Other factory activity indicators also improved in September. The new orders and shipments indexes remained negative for the fourth month in a row but moved up from their August levels. The growth rate of orders index jumped from –13 to zero, suggesting the pace of incoming orders may be stabilizing. Meanwhile, the September capacity utilization index climbed back into positive territory, with the share of manufacturers reporting an increase rising from 22 to 28 percent.

Measures of general business conditions continued to worsen. The general business activity index pushed further negative this month, falling to –18. The company outlook index dipped back into negative territory, with 25 percent of firms reporting a worsened outlook, the highest share in more than a year.

Labor market indicators improved slightly in September. The employment index turned positive, up from a negative reading in August. Nineteen percent of respondents said they hired additional employees, while 17 percent noted layoffs. Hours worked were largely unchanged, while wages and benefits rose modestly.

Prices firmed last month. After doubling in August, the raw materials price index remained at 24 in September, with 31 percent of manufacturers reporting higher input prices. Finished goods prices stabilized, ending a three-month streak of declines. The future indexes for both raw materials prices and finished goods prices were positive and posted large increases over last month.

The six-month outlook improved in September. Most future indexes of manufacturing conditions rose this month after falling in August. The future indexes for production and new orders jumped up; nearly half of manufacturers expect increases in these indicators in coming months. The future general business activity index advanced from –4 to 5, and the future company outlook index rose as well, with 80 percent of firms anticipating flat or improved activity six months from now.

The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Data were collected September 14–22, and 100 Texas manufacturers responded to the survey. Firms are asked whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month.
Survey responses are used to calculate an index for each indicator. Each index is calculated by subtracting the percentage of respondents reporting a decrease from the percentage reporting an increase. When the share of firms reporting an increase exceeds the share of firms reporting a decrease, the index will be greater than zero, suggesting the indicator has increased over the prior month. If the share of firms reporting a decrease exceeds the share reporting an increase, the index will be below zero, suggesting the indicator has decreased over the prior month. An index will be zero when the number of firms reporting an increase is equal to the number of firms reporting a decrease.

TCC’s Wisdom Speaks at EHCMA Quarterly Breakfast

On September 16th, TCC Vice President & General Counsel Christina Wisdom spoke at the Quarterly Breakfast Meeting of the East Harris County Manufacturer’s Association (EHCMA) and provided a preview of the upcoming Texas Legislative Session, which begins on January 11th. 

Ms. Wisdom reported that in the upcoming session, the Council would be focused on protecting the Texas chemical industry from unnecessary and harmful taxes, mandates and environmental regulations that could stymie expansion and growth in the Texas chemical industry.

ACIT South Texas Hosts Political Forum for Candidates
Texas House District 34 Representative Abel Herrero (D) speaks while his opponent, Connie Scott (R) looks on.

ACIT South Texas and the Port Industry of Corpus Christi hosted a Political Forum and Lunch at Flint Hills Resources on September 29th, with more than 145 attendees.  Sponsors included:
 
•    beAed Corporation
•    Corpus Christi Gasket & Fastener
•    Celanese International
•    CITGO
•    EPSCO International
•    Flint Hills Resources
•    LyondellBasell
•    Ray West Warehouses, Inc.
•    The Mundy Companies
•    Training & Development Systems
•    Turner Industries Group, LLC

ACIT South Texas Region Activities Committee Recognized

In 2010, ACIT would like to recognize and sincerely thank the Activities Committees from each region of ACIT. 

This quarter, we recognize the ACIT South Texas Region, which includes Aransas, Bee, Calhoun, Goliad, Jim Wells, Karnes, Kleburg, Nueces, Refugio, San Patricio, and Victoria counties.  Our Activities Committee member involvement and expertise has been invaluable and has enabled ACIT to bring chemical manufacturers and suppliers together as a united industry voice.  ACIT remains committed to maintaining a globally competitive environment for the chemical industry in Texas and providing networking opportunities for continued business growth and development. 

ACIT would not be successful without the sweat equity of our committee members who do the majority of the planning for each event in their region and to raise income for ACIT and for FREEPAC. Thank you to our member companies for allowing your employees to participate in the ACIT events in this region.

Committee member pictured (left to right) include Tom Curlee, Pete Anderson, Bob Morris, Lorraine McCain, Jovita Martinez, Robert Ybarra and Missy Socha.  Activity Committee members not pictured are Sandra Baucom, Gary Byrd, Scott Esparza and Whitney Havard.

Upcoming TCC & ACIT Events

October 6th – ACIT Mid Coast Economic Outlook Breakfast hosted by Dow Chemical Company in Freeport. State Senator Joan Huffman will give a preview of the upcoming legislative session. For more information, please click here.

October 14th – TCC/ACIT Annual Meeting Luncheon at the Houston Hilton Hobby Airport Hotel. The Luncheon Speaker will be TCEQ Executive Director Mark Vickery. For more information, please click here.

October 21st – ACIT Houston Ship Channel Golf Tournament at the Timber Creek Golf Club. For more information, please click here.

October 19th-21st – ChemInnovations 2010 Conference & Expo. TCC President & CEO Hector Rivero will be among the speakers at this event at Reliant Center in Houston. TCC members are entitled to a $100 discount on the full conference registration using the promo code SUP2010. For more information, click here.

November 10th – ACIT Golden Triangle Economic Outlook Luncheon at the Pompano Club in Port Neches.  More information will be sent out at a later date.

Mark Your Calendars: TCC/ACIT Chemicals Day 2011 at the Texas Capitol will be held on Wednesday, March 9, 2011.

All 2010 TCC and ACIT events are now listed on the website;



Upcoming Member Events

For a listing of TCC & ACIT Member promotions and events, please click here.

(These events are not organized or endorsed by TCC or ACIT.)