LOBBYING:

Chemical company adds muscle for push on energy, EPA

Eastman Chemical Co. beefed up lobbying this year as it sought a host of energy priorities including climate legislation rewrites, funding for power conservation work and scuttling U.S. EPA's effort to regulate greenhouse gases.

The Kingsport, Tenn.-based company spent more than $1.1 million in influence efforts through September, up 37 percent from the first nine months last year, Center for Responsive Politics data show. The company by Sept. 30 already had spent more than it had on lobbying all of last year, which at that time was a high mark of $1.08 million.

That money funded Eastman Chemical's in-house advocacy arm, while the company in January through September paid another $500,000 for advocacy work by lobbying shops Akin, Gump et al; Charles Estes; and McBee Strategic Consulting.

Even that combined spending is small compared with that of the largest oil companies and utilities. But Eastman Chemical was among a small group of businesses that upped spending in the third quarter of this year compared with the same period last year. Many companies and trade groups pared back lobbying work.

"We had a lot of things that were very important to us, particularly around climate and energy," said CeeGee McCord, Eastman Chemical's state government relations manager. "We felt like it was a good investment for us as a company."

Eastman Chemical plans to continue the energy efforts next year with the new Congress, though the kinds of climate and energy bills seen this session under Democratic rule are unlikely.

"We're still going to see a lot of interest from the Congress to do things to improve energy efficiency," a major issue for Eastman, said Ray Ratheal, Eastman Chemical's director of feedstock and energy procurement, energy and climate change policy. He is a registered lobbyist with the company. Eastman will pursue "things that will help energy-intensive manufacturing in the U.S. grow and be more energy efficient," he said.

The company makes chemicals, fibers and plastics materials used in a number of products. The parent company operates 11 manufacturing plants worldwide, including those in Pennsylvania, South Carolina, Tennessee and Texas. It employs about 10,000 workers.

The company has 21 lobbyists on the payroll, composed of seven who work in-house and the remainder at the outside firms. Of those 21 lobbyists, 13 previously worked on Capitol Hill or in a presidential administration, Center for Responsive Politics data show. They include former Rep. Vic Fazio (D-Calif.), past ranking member of House Oversight Committee and member of Appropriations; Charles Estes, former staff director to the Senate Interior Appropriations Subcommittee; and Jeffrey McMillen, staff director of the House Ways and Means Subcommittee on Select Revenue Measures.

The lobbyists' long list of energy and environment issues included work on S. 3072, the bill from Senate Commerce Chairman Jay Rockefeller (D-W.Va.) seeking to block U.S. EPA for two years from implementing regulations controlling carbon emissions from the largest polluters, a measure known as the "Stationary Source Regulations Delay Act." It was intended as a kind of timeout that gives Congress the opportunity to pass climate legislation (Greenwire, March 4).

"We did encourage lawmakers to delay or stop EPA regulation of GHG," Eastman's McCord said. "The EPA rules are not clear and could add months to the permitting process, and could also introduce uncertainty that would discourage investment in the U.S."

Eastman believes "that it would be better to have Congress deal with greenhouse gases rather than have EPA regulate it," Ratheal said.

One environmental activist questioned the sincerity of that position.

"It's fine for all of these groups to say, 'Let Congress do it,' but Congress has done nothing and will do nothing," said Frank O'Donnell, president of Clean Air Watch. "Everyone is aware that the new Congress isn't going to do it."

EPA has delayed taking action on stationary sources until 2011. Industry pressure on Congress contributed to that, O'Donnell said.

"It certainly propelled EPA to do the barest minimum with regard to stationary sources," O'Donnell said. "It's not going to have a dramatic impact on greenhouse gases or industry because it's so small."

Eastman Chemical also worked to influence climate bills in the House and Senate. The company felt the predominant Senate bill -- draft legislation from Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.) -- lacked clarity on how it would treat industries that use high amounts of energy in their business.

"Climate policy can impact the cost of energy we buy (i.e. natural gas, electricity, etc.) and since we also buy energy for our boilers, we also have the issue of carbon emissions at our plants," McCord said in an e-mail.

As well, Ratheal said, the language "left the details up to the administrator of the program," which would have been EPA.

"We're a very complicated industry," Ratheal said. "It's not like other energy intensive manufacturing [businesses]," that make one product.

Eastman does not have a public position on supporting or opposing federal legislation to limit carbon emissions, McCord said.

"However, we have goals and work on projects to reduce our carbon emissions on a per-unit of output basis," McCord said.

White House lobbying

In addition to lobbying Congress, company advocates spent time at the White House. They joined other industry representatives who spoke with officials at the Office of Information and Regulatory Affairs (OIRA) about planned EPA moves.

Stephen Gossett, Eastman's senior environmental associate, attended an April 9 meeting at OIRA on EPA's proposed "Boiler MACT" rule. It would require operators of boilers to install maximum achievable control technology (MACT) for toxic air pollutants such as mercury. The regulation could cost tens of billions of dollars to upgrade the nation's roughly 200,000 boilers, which provide power to many industrial facilities, universities and hospitals.

Chemical plants and other manufacturers have boilers to generate steam for heating their production processes, as well as generating their own power. The boiler rule has prompted opposition from businesses, which say that the rule would cause high costs.

Gossett attended that meeting along with officials from the American Chemistry Council, chemical companies ISP Chemco Inc. and BASF Corp., manufacturer PPG Industries Inc. and Exxon Mobil Corp.

They presented arguments "why the proposed rule needs modification," Ratheal said. They also offered letters from senators and House members questioning EPA's plan. Eastman Chemical had talked to lawmakers about the company's apprehension, Ratheal said.

"We're concerned that the rule as proposed would be very difficult to comply with," Ratheal said, adding "a lot of equipment manufacturers won't even say that their equipment will make the standards that EPA's proposed."

The lobbying effort against the Boiler MACT rule has been "ferocious," Clean Air Watch's O'Donnell said. The Boiler MACT rule, he said, "is one of the most significant EPA rules, intended at limiting disease and death from air pollution."

Because of the letters from lawmakers on the issue, O'Donnell said, "the EPA has essentially been given a stern warning that it better be careful in proceeding."

O'Donnell also said he doubted the costs would be as high as industry fears.

"The history of clean air control has been stories of massive exaggeration of the potential negative effects," O'Donnell said.

Eastman Chemical lobbyist Brent Perry joined a group that met with OIRA in June on EPA's plan to add a group of plastic softeners to a list of substances that the agency finds "may present an unreasonable risk of injury to human health or the environment."

Perry was asked to attend by the American Chemistry Council, McCord said. At the meeting, McCord said, the chemical trade group asked that the EPA designation not be attached to the specified phthalates. Perry did not speak, she said, but was there as a representative of an ACC member company.

At that meeting, Eastman and representatives from chemical makers presented a list of U.S.-based assessments that list the plastic softeners as having negligible or minimal risks, except one listed as having some risk for children and "concern" for infants. The same document showed that the European Union requires labels on several of the softeners stating that they are "regarded as if it causes effects," or "cause for concern."

EPA's plan would highlight chemicals already on the radar screen, said Richard Denison, senior scientist at the Environmental Defense Fund. States and other countries have issued warnings and even banned some of the chemicals, he said.

EPA's designation, Denison said, is "a very useful way to say to industry and to say to the public, these are chemicals of concern. They are going to be scrutinized."

It is actually helpful to industry, he said, giving an early warning that "you need to start thinking about whether the chemicals are safe in the way you are using them."

EPA's plan on the plastic softeners remains under review by the White House budget office amid pushback from industry representatives (Greenwire, Sept. 28). Environmental groups, meanwhile, are pushing for EPA to move forward (Greenwire, Oct. 19).

Reducing usage

Eastman's chemical group also pursued policies that would nurture the company's energy efficiency work.

"We've had a very aggressive energy management program in place for many, many years," Ratheal said. "We're a partner in EPA's Energy Star program."

The company also took a Department of Energy pledge to reduce energy usage 25 percent over a decade, Ratheal said.

Company lobbyists in the third quarter talked with the Senate Energy and Natural Resources Committee about its energy bill from Chairman Jeff Bingaman (D-N.M.). The company hoped its energy efficiency projects at chemical plants could be specified as eligible in any extension of a stimulus bill program that gave tax incentives to manufacturers of products used for renewable energy. The program, referred to as Sec. 48C for its place in the stimulus bill, gave 30 percent of the cost of the project upfront in lieu of tax credits the business otherwise would be eligible to receive.

Eastman lobbyists this year also sought funding help with technologies to help move away from fossil fuels and toward energy sources like biofuels. As well, the company has a facility in Tennessee that turns coal into gas and uses it to make chemicals.

"We'd like to see more interest in gasification to make chemicals," Ratheal said.