Texas governor’s race could pit state chem laws against federal

02 March 2010 16:38  [Source: ICIS news]

Perry differs with Obama administrationHOUSTON (ICIS news)--For Texas chemical producers, Tuesday’s primary elections for Texas governor - including the high-profile Republican race involving incumbent Rick Perry and US Senator Kay Bailey Hutchison - all tie into the recurring theme of Texas versus Washington, DC.

In a state where nearly 60% of the US’ chemical manufacturing is located, environmental regulators of late have allowed more flexibility than federal agencies in emissions reporting. Texas has more chemical plants, oil refineries and coal-fired power plants than any other US state, and its chemicals industry ranked second among all state sectors in 2009 exports.

According to the Texas Chemical Council (TCC), a top priority is maintaining such flexibility.

“Governor Perry’s leadership to lower taxes, pass meaningful tort reforms, and provide a fair and balanced regulatory system has enabled the Texas chemical industry to compete in the global economy,” said TCC president Hector Rivero in an endorsement of Perry.

The TCC, which represents 77 chemical companies in the state with more than 200 manufacturing facilities and over $50bn (€37bn) in assets, cited Perry’s stances against federally-proposed cap-and-trade legislation and regulation of CO2 by the US Environmental Protection Agency (EPA) as additional reasons for its support.

While Hutchison's stances are similar, Perry has the advantage of being the longest-tenured governor in Texas history, serving since 2000. That 10-year timeframe gives him the advantage of being “proven” on such state issues, the TCC said.

Although federal officials set nationwide standards on chemical issues such as emissions, Texas in recent years has allowed a more flexible approach.

For example, the Texas Commission on Environmental Quality (TCEQ) allows companies to exceed emissions limits in particular units - so long as they are under an overall emissions average for a facility.

Several chemical producers described the flexible permits practice as necessary, given that changes to operating rates and capacities would not be taken into account under rules that set limits for each unit.

Last year, the EPA said such allowances were illegal under the US Clean Air Act, and said it would attempt to make its rejection mandatory in 2010.

However, the EPA’s ruling has not been made final, while state regulators have yet to announce any subsequent emissions plans. That fight is likely to be at the forefront of state legislative issues over the near-term, as they pertain to chemical makers.

In fact, under Perry, the state recently took legal action in the US Court of Appeals, challenging the EPA's endangerment finding for greenhouse gases (GHG).

Hutchison also spoke out against the endangerment finding, saying it had begun a process that was "badly misguided" and would "lead to disaster for the Texas economy".

While Perry and Hutchison appear on the same side over many of those issues, it remains to be seen whether scars from their battle will heal by November’s general election. Advertisements from each side have become heated, with Perry attempting to tie Hutchison with alleged problems in Congress and Hutchison accusing Perry of reckless spending.

Both Republican candidates have spent more than $8m in their primary campaign, according to reports - leaving them each with about $2.5m in cash.

Meanwhile, former Houston mayor and Democratic governor candidate Bill White – who has had the luxury of running without a serious primary challenger – has only spent about $2.7m, leaving him with $5.4m in cash – more than double of either Perry or Hutchison.

According to White’s campaign website, the EPA’s aforementioned ruling occurred after federal officials met with White, who was upset when the TCEQ failed to act for months following a formal protest from the city of Houston over a benzene permit from an area refinery.

As such, a White administration would appear likely to move Texas chemical laws closer to those of federal officials. Moreover, the odds of White waging a serious battle in the fall appear strong, even in a state without a Democratic governor since 1994.

Aside from White’s current cash advantage, several polls show him within five percentage points of both Perry and Hutchison. In addition, according to the Fort Worth Star-Telegram, several large Hutchison donors have said they will not support Perry and would be open to donating to White’s campaign.

While Hutchison and Perry are considered by analysts to be largely similar on energy and economic platforms, Hutchison is considered by many as more moderate on social issues.

In all likelihood, the Republican battle will extend beyond Tuesday. By Texas law, primary elections go to a runoff if no candidate captures a majority (more than 50%) of the vote. Hutchison and Perry are the two leading candidates, but others including Debra Medina are also on the Republican ballot.

Though most polls show incumbent Perry leading Hutchison and other contenders, the vast majority show him well under the 50% threshold to end the race.

The runoff between the top two candidates would be held on 13 April.

($1 = €0.73)

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By: Ben DuBose
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