LEGISLATIVE/REGULATORY SUMMARY OF ACTIONS
IN OCTOBER 2006

HIGHLIGHTS:

Governor Issues “Green Chemistry” Executive Directive (#2006-6)

Governor Jennifer Granholm has issued an Executive Directive to promote Green Chemistry. “Green chemistry means chemistry and chemical engineering to design chemical products and processes that reduce or eliminate the use or generation of hazardous substances while producing high quality products through safe and efficient manufacturing processes.” The 12 principals upon which green chemistry is based are:

1. Prevent waste.
2. Design safer chemicals and products.
3. Design less hazardous chemical synthesis
4. Use renewable feedstocks
5. Use catalysts, not stoichiometric reagents.
6. Avoid chemical derivatives.
7. Maximize atom economy.
8. Use safer solvents and reaction conditions.
9. Increase energy efficiency.
10. Design chemicals and products to degrade after use
11. Analyze in real-time to prevent pollution
12. Minimize the potential for accidents.

Under the directive, state agencies are to seek pollution prevention and sustainable economic development through green chemistry by:

1. Encouraging the research, development, and implementation of innovative chemical technologies that accomplish pollution prevention in a scientifically sound and cost-effective manner.
2. Promoting the use of chemical technologies that reduce or eliminate the use or generation of hazardous substances during the design, manufacture, and use of chemical products and processes.
3. Encouraging the use of safer, less toxic, or non-toxic chemical alternatives to hazardous substances to promote sustainable economic development in Michigan.

The Department of Environmental Quality is to coordinate the efforts of state departments and agencies to promote green chemistry. The DEQ is also directed to establish a Green Chemistry Support Program to promote and coordinate state green chemistry research, development, demonstration, education, and technology transfer activities in Michigan. Subject to available resources, the Program shall be designed to do all of the following:

1. Provide encouragement for green chemistry research, development, demonstration, education, and technology transfer.
2. Examine methods by which state government can create incentives for consideration and use of green chemistry processes and products.
3. Facilitate the adoption of green chemistry innovations in Michigan.
4. Expand education and training of undergraduate and graduate students, and professional chemists and chemical engineers in Michigan, including through partnerships with industry, in green chemistry science and engineering.
5. Collect and disseminate information on green chemistry research, development, and technology transfer.
6. Provide venues for outreach and dissemination of green chemistry advances such as symposia, forums, conferences, and written materials in collaboration with, as appropriate, industry, academia, scientific and professional societies, and other relevant groups.
7. Support economic, legal, and other appropriate social science research to identify barriers to commercialization and methods to advance commercialization of green chemistry.
8. Provide for public input and outreach to be integrated into the Green Chemistry Support Program by the convening of public discussions, through mechanisms such as citizen panels, consensus conferences, and educational events.
9. Promote voluntary, cooperative efforts with industrial sectors to develop green chemistry plans.
10. Make recommendations to the Governor on an annual basis for a Governor's Green Chemistry Award, promoting excellence, innovation, economic development, and public health risk reduction by businesses and institutions.
11. Maintain a website to provide information about the Green Chemistry Support Program.

Under the Green Chemistry Support Program, the Department shall convene a Green Chemistry Support Roundtable to include representatives of public health, industrial, environmental, local government, and general public perspectives as deemed appropriate by the Department. The Roundtable may establish subgroups organized around particular chemicals or other classes of chemicals to identify the need for green chemistry research and innovation for alternatives.

ENVIRONMENTAL ISSUES:

Foreign Waste Become Issue In State/National Political Campaigns

The issue of importing out-of-state and out-of-country waste into Michigan has entered the state and national political campaign fray. In the U.S. Senate race between incumbent Democrat Debbie Stabenow and Republican challenger Mike Bouchard it has become a campaign issue. In the House race between incumbent Republican Dave Palsrok (Manistee) and Democratic challenger Dan Scripps, Palsrok has been accused of holding up legislation to ban out-of-state waste (Palsrok chairs the House Great Lakes & Environment Committee). In the race between incumbent Republican Tom Casperson (Escanaba) and Democrat challenger Judy Nerat, Casperson has been accused of being soft on banning out of state (Wisconsin) and out of country (Canada) waste. Republican gubernatorial challenger Dick DeVos has had the issue come up in one of his three debates with incumbent governor Jennifer Granholm. Clearly, the Democrats see some benefit to trumpeting the issue. The question is whether a likely Republican-controlled state legislature will take any further action absent a specific grant of federal authority as required by Constitutional law.

Part 201 Study Group To Begin Work

A group reviewing Michigan’s environmental clean up program under Part 201 of the Natural Resources & Environmental Protection Act has begun its work through four subcommittees: Liability, Administration, Complexity, Brownfields. The group is expected to compile its recommendations and deliver a report in the Spring of 2007.

ENERGY:

Hearings Scheduled For DTE/Consumers ‘07Power Supply Cost Recovery Factors

For 2007, Consumers Energy (U-15001) has applied to use a power supply cost recovery (PSCR) factor of 0.01601 per kWh for its commercial and industrial customers. A hearing on the proposal is scheduled for November 21, 2006. DTE (U-15002) has applied to implement a maximum power supply cost recovery (PSCR) factor of 9.73 mills per kWh through December 31, 2007 for its retail customers. A hearing on the DTE proposal is scheduled for November 22, 2006. Both filings represent significant increases over the authorized PSCR for 2006.

21st Century Energy Plan Workgroups Meet/Study Capacity Needs

In response to Governor Granholm’s Executive Directive 2006-2, Michigan Public Service Commission has been holding meetings to craft a 21st Century Energy Plan for Michigan. The effort involves four work groups: 1. Capacity Needs Forum Update Group, 2. Renewable Energy Group, 3. Energy Efficiency/Load Management Group, 4. Alternative Energy Technologies Group. Each group has been assigned MPSC staff members and the public is invited to participate in various work groups. At the latest Capacity Needs Update group meeting, corrected case scenario modeling from New Energy was presented. The draft final report is expected to be distributed sometime in November.

North American Energy Reliability Council Predicts Capacity Shortages

The National Energy Reliability Council (NERC) is predicting the Midwest will be one of six regions that could see power demand encroach into reliability margins in as soon as 2 years. The group warned that demand could outpace supply over the next 10 years. The Michigan Public Service Commission has been conducting its own update of Michigan’s capacity needs assessment as part of the 21st Century Energy Plan process.

TAXES & ECONOMIC DEVELOPMENT:

Governor Could Call For Ballot Proposal For Business Tax Replacement

If the Legislature is unable to come up with a suitable and timely replacement for the recently-repealed Single Business Tax (SBT), Governor Granholm has indicated her willingness to consider a ballot proposal to establish a business tax to replace the $1.9 billion in annual revenue generated by the SBT. A special joint House/Senate committee is to provide recommendations on a replacement tax by December 1, 2006.

Business Tax Replacement Debate To Be Held For Next Legislative Session

To avoid the panic and haste of addressing a replacement tax for Michigan’s recently-repealed Single Business Tax, House Tax Policy Committee chair Fulton Sheen has suggested the matter be held for the 2007 legislative session. Mr. Sheen has been soliciting input from interested parties on how best to fill the $1.9 billion hole in the budget caused by the SBT repeal. The Grand Rapids Chamber, Detroit Regional Chamber and Michigan Chamber have weighed in with replacement proposals. The Michigan and Grand Rapids Chamber proposals allow for replacement or reduction of the personal property tax in addition to the SBT.

NFIB Calls For Moratorium On Administrative Rules

The National Federation of Independent Business (NFIB) has called upon legislative leadership for a moratorium on the promulgation of any further administrative rules until a new rule development procedure can be developed that provides greater public input and legislative oversight. Pointing to a recent 116 page rules package governing well drilling, the group said the package is the latest example of a state agency running amok and giving Michigan a reputation of having an unfavorable regulatory climate.

LANSING POLITICS:

Incumbent Granholm Continues To Lead Challenger DeVos In Governor’s Race

Incumbent Governor Jennifer Granholm has continued to hold her 6-8 point lead over Republican challenger Dick DeVos in the most expensive gubernatorial campaign in Michigan history. With only one week left in the campaign, it appears DeVos will have difficulty closing the gap in the remaining 7 days prior to the election on November 7th.

K-zoo Billionaire Enters Michigan Campaign With “Coalition For Progress”

Liberal billionaire John Stryker (Kalamazoo) has been financing a pro-Democrat group entitled “Coalition For Progress.” Stryker has reportedly contributed over $5 million of personal money to the group which is running political ads supporting Democrat candidates.

Business Group Warns Legislators Of 25/25 “Renewable Energy Pledge”

The Michigan Chamber is warning legislators of the danger of signing on to a pledge being circulated by Environment Michigan to have 25% of the state’s power come from renewable sources by 2025 as well as to reduce total usage by 10% by that year. The pledge also calls for billions to be spent on the development of renewable energy and conservation technology. The Chamber cites reports from the Michigan Public Service Commission that indicate the maximum achievable is 7 percent by 2017. The Chamber is advocating tax incentives rather than mandating a prescribed mix of energy resources.

Michigan Unemployment Holds/State Revenues Drop

Michigan’s unemployment rate held steady from last month at 7.1%. The national unemployment rate dropped from 4.7% to 4.6% last month. Michigan moved up to 49th worst as Mississippi unemployment increased last month by .1%. In September, state tax revenues fell by 9.5% compared to September of last year and resulting in a year to year (fiscal 2005 to fiscal 2006) drop of 8/10 percent.

INDUSTRY NEWS:

AFS Aims to Impact USTR Report on China’s WTO Compliance

The American Foundry Society (AFS) recently filed comments to the Office of the U.S. Trade Representative (USTR) for their annual report to Congress on China’s World Trade Organization (WTO) compliance record.

China became a member of the WTO in 2001, and under the agreement, USTR must submit an annual report to Congress on China’s WTO compliance efforts by Dec. 11 of each year. Based on member input, AFS identified several areas in which China hasn’t fully complied with rules it agreed to when joining the WTO, including undervalued currency, government subsidies to many of its manufacturers (including metalcasting facilities) through government grants, tax breaks, cheap water and energy, and generous loan terms from state-owned banks.

For more information, contact Stephanie Salmon, AFS Washington Office, at 202/842-4864 or ssalmon@afsinc.org.

MEMBERS IN THE NEWS…

Hayes Lemmerz Sells Suspension Machining Unit

Released on Monday, October 16, 2006

Hayes Lemmerz International Inc., Northville, Mich. announced the sale of its Southfield, Mich., iron suspension components machining plant to Whitebox Advisors LLC, Minneapolis, and the management team who had previously purchased the company's Cadillac, Mich., ductile iron foundry in December 2005.

Under the agreement, this group has acquired all of the outstanding shares of stock of Hayes Lemmerz International-Southfield Inc., a wholly owned subsidiary of Hayes Lemmerz. The company will be renamed 3Point Machine, Inc.

The plant employs about 180 people.

"This transaction is considered strategic to our core business, as we are the primary casting source for this facility,” said Daniel Minor, President of 3Point Machine, Inc. “Our Cadillac, Mich., and Southfield operations complement one another extremely well, and will create value for both facilities.”