Editorial Comment: Unintended regulatory consequences: Lessons learned
Over my 40-yr professional career in the oil and gas processing, refining and petrochemical industries, I have seen many well-intended government regulations completely backfire, cause irrational responses or get lip service.
Over my 40-yr professional career in the oil and gas processing, refining and petrochemical industries, I have seen many well-intended government regulations completely backfire, cause irrational responses or get lip service.
Price/supply
OPEC found its muscle in the oil embargo of 1973, which was in response to US support for Israel in the Yom Kippur War. By the end of the embargo, the cost of crude oil had quadrupled. In a protective move, the US Congress passed the Energy Policy and Conservation Act to stifle the impact of future oil embargoes by foreign oil-producing countries. In late 2015, the ban on exporting crude oil from the US was lifted. This act provided unforeseen outcomes, such as the export of a significant amount of liquefied petroleum gas (LPG) to Asian markets to be used as petrochemical feedstock. This outcome was unanticipated by politicians, and was a result of shale producers selectively targeting shale gas fields with associated liquids, as opposed to dry gas fields. Lesson 1: Constraining markets, just like unilateral sanctions, can have unintended consequences.
Environment
In 1996, the California Air Resources Board (CARB) enforced the addition of water-soluble oxygenate methyl tert(iary)-butyl ether (MTBE) to gasoline to meet a federal mandate of 2% oxygenates in gasoline. That federal mandate arose from the 1990 Clean Air Act Amendment to reduce the amount of carcinogenic benzene allowed in gasoline. A few years later, the discovery of MTBE contamination in groundwater reversed this use in California.
However, this act was in use across most of the US, with more than $10 B of capital investments in MTBE plants, most of which have now been mothballed. MTBE was then displaced by taxpayer-subsidized ethanol, but at a higher 10% blend rate. The agriculture lobby wants even higher percentages, but the refining industry has fought back by pointing to the negative economic benefits of raising ethanol-blending percentages. Lesson 2: Governments should not dictate how scientific targets are achieved at the taxpayers’ expense.
Safety
In response to the 2013 ammonium nitrate fertilizer explosion in West Texas, later deemed to be arson, the US government issued EO13650 on improving chemical facility safety and security. The working group was co-chaired by Homeland Security, the US Environmental Protection Agency (EPA) and the Occupational Safety and Health Administration (OSHA). These organizations proposed changes to the Risk Management Program rule. The EPA proposed an added requirement for process hazard analysis (PHA), which included enhanced emergency preparedness requirements and increased public availability of chemical hazard information.
The notice of rulemaking specifies the use of third-party audits, incident investigations and root cause analysis (RCA), safer technology alternatives analysis, local emergency planning committee coordination and emergency response exercises. Parts of this law are common sense (investigate incidents, have a management-of-change system in place, etc.); plants with good leadership already do these things. However, I believe the section about publishing all of the data online is problematic. This online data could be used against companies by those wishing to do the industry harm, or those with an agenda against a specific industry. Facilities should keep the required key records onsite, along with a secured, backed-up copy offsite, for review and discussion with local regulators and emergency responders. Lesson 3: Have national, scientifically sound standards, but local, accountable enforcement. HP
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