Key Policy Issues for the Metalcasting Industry
Modern Casting takes a look at pending legislative actions that could heavily impact the metalcasting industry.
A Modern Casting Staff Report
(Click here to see the story as it appears in the June issue of Modern Casting.)
New and updated U.S. policies in the works for the coming year will have considerable impact on businesses within in the metalcasting industry if enacted. Much of the legislation that could have the most impact on the industry stems from new rules and regulations from the U.S. Environmental Protection Agency (EPA) and the Occupational Safety and Health Administration (OSHA), including the proposed rule to tighten silica permissible exposure limits and the Clean Power Plan.
Metalcasters could face higher penalties and energy costs, even as the industry works to develop cost efficient and feasible methods of achieving better environmental results. The pace of required reduction set forth by the proposed energy and environmental policies will be difficult to match by the industry both economically and technically.
EPA’s Clean Power Plan Rule
This summer, EPA is expected to finalize a sweeping new regulation, known as the Clean Power Plan, to reduce carbon dioxide emissions from new and existing power plants. The proposal would transform how electricity is generated, transmitted, distributed and used. It will mandate existing power plants cut their emissions by 25% by 2020 and by 30% by 2030. For many states, especially those with fossil-fuel intensive electricity production, this could be a costly process requiring some electricity plants to be shuttered. EPA’s analysis shows the plan will force the closure of 46 to 49 gigawatts of coal-fired plant capacity—equal to about 15% of all U.S. coal-fired generation capacity. At least 40 states will face double digit increases in their electricity rates, according to NERA Economic Consulting as estimated in the report, “Potential Energy Impacts of the EPA Proposed Clean Power Plan.”
Bills in the House and Senate offer what supporters are calling a balanced approach to environmental and energy policies. The Ratepayer Protection Act (H.R. 2042), introduced by Reps. Ed Whitfield (R-Ky.), Sanford Bishop (D-Ga.), Morgan Griffith (R-Va.) and Collin Peterson (D-Minn.), and the Affordable Reliable Energy Now Act (ARENA) (S. 1324), introduced by Sen. Shelly Moore Capito (R-W.Va.), would:
- Extend the Clean Power Plan rule’s compliance dates pending final judicial review, including the dates for submission of state plans.
- Create safe harbor for states to protect ratepayers, preventing states from being forced to implement the rule if doing so would have significant adverse impacts to ratepayers.
- Require EPA to issue state-specific model plans demonstrating how each state could meet the required greenhouse gas emissions reductions under the rule.
EPA has proposed tightening the National Ambient Air Quality Standard (NAAQS) for ozone from its current standard of 75 parts per billion to between 65-70 ppb. It is estimated the rule could cost the nation $140 billion annually.
According to EPA’s data, 322 of 675 monitored counties are now violating the current ozone standard. Counties and states have just begun implementing the new standard earlier this year after a lengthy court battle lasting since 2008, when the rule was finalized.
Detractors of the rule say the emissions reduction costs will have significant impact on the nation’s energy sector, because it is projected to lead to the premature retirement of many coal-fired plants. It also will cause most states to be in “no-growth zones” because they will fall into nonattainment areas. Nonattainment designation triggers additional pollution control requirements, restrictions on expansion and more stringent permitting requirements, which will apply to manufacturing facilities, as well as new and modified power plants.
Metalcasting facilities in nonattainment areas will not be able to expand production or build a new facility without a significant reduction of emissions or shutdown of operations from other plants in the local area. Funds for roads and highways also could be frozen in nonattainment areas.
In light of the economic hardship a new ozone standard could cause, legislators have introduced the Clean Air Strong Economies (CASE) Act (S. 751/H.R. 1388). The CASE Act would:
- Improve the ozone rulemaking process by requiring better scientific data, more transparency and considerations of feasibility and economic impact.
- Prevent EPA from setting more stringent ozone standards until at least 85% of counties in “nonattainment” achieve compliance with the current standard.
- Require the EPA to consider feasibility and economic impacts when deciding where to set the ozone standards, two things the EPA currently is barred from considering under the Clean Air Act.
- Mandate the EPA use only direct air quality monitoring in designating any counties as being in nonattainment with the ozone NAAQS.
Proposed Crystalline Silica Standard
In September 2013, OSHA proposed a comprehensive new regulatory structure for the control of crystalline silica, including drastically reducing the silica permissible exposure limit (PEL). The U.S. metalcasting industry uses millions of tons of silica sand per year in the production of critical cast metal components.
As proposed, OSHA’s new regulation likely will force some facilities to close, shift production offshore and impact the long-term productivity, profitability and competitive structure of the metalcasting industry. OSHA expects the proposed crystalline silica standard to be finalized in 2016.
The American Foundry Society has been communicating with OSHA and lawmakers regarding its concerns about the proposal, asking for the rule to be withdrawn until a technologically and economically feasible rule can be established. Key concerns with the proposed rulemaking include:
It prohibits certain work practices that contradict existing industry safety practices. For example, OSHA bans dry sweeping, compressed air and employee rotation as control methods, but for many metalcasting facilities, compressed air is the only feasible method to clean complex castings. Wet vacuuming can damage equipment and create a significant explosion risk.
It underestimates and/or completely omits the cost of equipment and processes. Metalcasting facilities will have to exhaust all feasible engineering and work practice controls to meet the new PEL. New dust collectors, which can cost more than $1 million to install, were not accounted for by OSHA. Professional cleaning services would cost $1 per sq. ft. of facility, plus $400 million annually for downtime.
It conflicts with EPA regulations, as some metalcasting plants will be forced to redesign ventilation systems and in some cases, make changes to their air permits, which can take at least a year to obtain.
OSHA’s estimated cost of the silica proposal for the metalcastsing industry is $43 million; however, economic analysts projected the cost to be more than $2.2 billion annually. This represents 9.9% of the metalcasting industry’s revenue and 276% of its profits. The economic impact will disproportionately affect small businesses.
Employers are expected to achieve complete compliance within one year of the effective date.
AFS is asking Congress members to contact the chairs of the Senate and House Appropriations Labor/HHS Subcommittees urging support of language in the FY 2016 Labor/HHS Appropriations bill preventing OSHA from receiving funds to work on the agency’s proposed silica rule. AFS is also asking the Senate subcommittee to require OSHA to undertake a new Small Business Panel Review (SBREFA).