NPDES General Permit for Industrial Activities - Feds and States Head toward Numeric Limits in Storm Water NPDES Permits

Traditionally, EPA has regulated storm water differently than point source discharges.  Regulators recognized that it was easier to install new technology to reduce pollutant loading from a specific industrial process with a specific "end of pipe" discharge point.  Storm water was much more unpredictable.

Therefore, U.S. EPA regulated storm water using general NPDES permits without specific numeric limits.  Instead, the general permit would require the development of a storm water pollution prevention plan (SWPPP) which required companies to institute "best management practices" (BMPs) to reduce pollution from run-off.  The effectiveness of BMPs were evaluated by monitoring pollutant levels in run-off. but permits did not contain specific numeric effluent limits that had to be met.

EPA recognized the difficulties in trying to establish a numeric effluent limit for storm water discharges due to the variables involved.  For instance, due to the variability of the size and nature of storm events, the amount of pollutant leaving a site in run-off was difficult to evaluate.

In 2002, EPA issued guidance that stated numeric limits would only be used "rarely" in storm water NPDES permits.  However, EPA believe technology has improved and has signaled a shift toward numeric limits for storm water control. In 2010, EPA issued a controversial revision to that guidance indicated numeric values may be appropriate.  (See, "Guidance on Establishing TMDL Waste Load Allocations for Storm Water Discharges in NPDES Permits"  EPA November 2010)

Benchmarks Versus Numeric Limits

The first step toward numeric limits is EPA's use of "benchmarks" in storm water permits.  EPA makes clear that benchmarks are not effluent limits.  This means an exceedence of the numeric value is not a violation.  However, the exceedence is evidence that BMPs need to be improved to reduce pollutant loading.

In December 2011, Ohio EPA followed U.S. EPA lead and incorporated benchmarks into its final version of the new NPDES General Permit for Industrial Activity.  This permit differs from the previous General NPDES Permit companies  in two significant ways. 

First, the permit contains industry specific requirements (which is why the permit is 141 pages long).  Second, it uses benchmarks tied to specific industrial activity that will be used to determine the effectiveness of BMPs.

Ohio EPA's new General  Permit became effective starting January 1, 2012.   However, facilities will still be covered by their old general permits, as long as they are still effective.  Existing facilities will begin the transition to the new permit upon notification from Ohio EPA. 

Ohio EPA will send written instructions to existing covered facilities on how to continue their general permit coverage with the submittal of a “re-notification” of intent to be covered. The existing facility will have 90 days to submit the re-notification.

Benchmark Monitoring

The new permit is effective for five years.  During the first four years of the permit, facilities to which the industry specific benchmarks apply, will monitor their compliance with the benchmarks.

In the first three years of the permit, monitoring and reporting is required for four out of the 12 quarters.  In year number four, the data is averaged and compared to applicable benchmarks for that industrial activity. If facilities are still exceeding the benchmarks after four years, they will be forced to review their BMPs, storm water control plans and house keeping activities to further reduce pollutant loading.

How Far will Facilities Need to Go to Comply with Benchmarks?

The permit makes very clear that the benchmarks are not enforceable effluent limits.  Therefore, an exceedence is not a violation which could subject the facility to an enforcement action.  However, the expectation is the facility will continue to improve storm water controls if the benchmarks are not met. 

The final permit does contain language that allows faculties to assert they have done all they feasibly can to reduce pollutants.  The permits states that facilities can demonstrate that “no further pollutant reductions are technologically available and economically practicable and achievable in light of best industry practice to meet the control measures/best management practices (BMPs) in Part 2 of this Permit.”

The determination must be documented and retained with the (SWPPP, and provide notification of this determination to Ohio EPA at the due date for the next benchmark monitoring report.  Of course, a company's determination as to what is economically practicable may not be the same as the Agency's. 

(For more information on Ohio EPA's NPDES General Permit for Industrial Activity- click here)

 

JobsOhio $1.4 Billion Dollar Deal Includes Sketchy Details on the Future of Clean Ohio

Details were released this week by the Kasich Administration on the establishment of its privatized economic development agency known as JobsOhio.  Many of the traditional job creation duties that fell to the Ohio Department of Development will be shifted to JobsOhio. 

Along with the restructuring of development duties, the Administration is shifting the State's liquor profits to help fund the Agency.  Last year the liquor profits took in around $700 million in revenue to the State.  In return for a 25 year agreement to fund JobsOhio with liquor profits, JobsOhio will make a one-time $1.4 billion dollar payment back to the State.  Details of how those funds would be utilized were discussed in the Plain Dealer:

The $1.4 billion agreement calls for Ohio to collect $500 million for its general revenue fund, money already factored into the current state biennial budget, $750 million to pay off existing liquor revenue backed bonds, and $150 million to continue "Clean Ohio" environmental programs for the next three years.

The reference in the Plain Dealer Article regarding Clean Ohio is a bit confusing.  Based upon an article in Columbus Business First, the $150 million is set aside to pay for the grants that were awarded or will be awarded by July 1, 2012.  In the future, funding will be set at $43 million per year.

The agreement, which will be reviewed and possibly voted on Jan. 30 by the state Controlling Board, includes a provision for the $43 million for economic revitalization projects as well as $150 million to cover Clean Ohio Fund projects approved by the state before July 1, 2012.

Impact on Clean Ohio

The transformation of the Ohio Department of Development and creation of JobsOhio has resulted in tremendous uncertainty regarding  the State's $50 million dollar per year brownfield redevelopment program. 

This fall, when the Administration made the announcement that liquor profits would be shifted, the Administration said it would look for a new revenue source to support Clean Ohio.  It now appears that the same revenue-a portion of liquor profits- will be used to support the program for the next three years. 

What remains uncertain is when that money will be available.  Currently, the Ohio Department of Development announced the end of funding for the Clean Ohio Assistance Fund (COAF) which pays for Phase II environmental assessment on brownfields.  Also, the Department announced the current round of the Clean Ohio Revitalization Fund (CORF) would be its last. Now that the funding source has been announced, the question is when will the State start accepting grant applications again?

Due to the fact the $150 million is being allocated pay for COAF and CORF grants in the pipeline and the last round of CORF, it appears no new funding will be available for Phase II work prior to July 1st.


Who Will Administer Clean Ohio in the Future?

What also remains uncertain is whether the current process for grant selection and administration will remain.  During yesterday's announcement, the Administration indicated that the current process will remain in place through the summer.  However, the Kasich Administration also suggested that legislation could be introduced this Spring to modify the program. 

What the Administration did make clear is that they want to see more direct economic development benefits for use of Clean Ohio funds in the future.  This means it is unlikely grants such as the Redevelopment Ready track of the Clean Ohio program will continue. 

The Redevelopment Ready track provided grants up to $2 million to clean brownfields that were primed for development based on their location but lacked a specific end use (i.e. development project).  Some argued that the Redevelopment Ready Track allowed areas outside Cleveland, Columbus and Cincinnati to better compete for the grant money. 

While this week's announcement seemed to answer the question as to whether funding will remain in place for Clean Ohio in the near future, there remains three major questions:

  1. When will the grant process open up again:
  2. Who will administer the program- the newly created Ohio Development Services Agency or JobsOhio; and
  3. What will the grant application and selection process look like in the future?


 

EPA Won't Seek to Enforce Boiler MACT Deadlines After Recent Court Decision

In my prior post, I discussed the recent federal court ruling with found EPA's self-imposed stay of the Boiler MACT illegal.  Following the Court's ruling, concern was immediately raised by industry that they would be subject to the original deadlines that appear in the 2011 rulemaking. 

Yesterday, Administrator Jackson responded to a letter from Senator Ron Wyden regarding the EPA's position in light of the Court's ruling:

Regarding the impact of the recent court decision, we have carefully reviewed the effect that vacating the stay may have on new and existing sources and plan to address potential impacts. Specifically, using our enforcement discretion, the EPA will issue a no action assurance letter shortly, informing sources that EPA will not enforce any of the administrative notification requirements for new or existing boilers and incinerators in the 2011 Rules for a period of time while the EPA works to take final action on the proposal to reset these dates. For existing boilers and incinerators, these administrative notification requirements are the only obligations sources would otherwise have under the 2011 Rules prior to when the EPA intends to finalize the reconsideration process.

EPA also intends to reset the compliance clock once the final rule is issued:

Finally, the EPA recognizes that industry needs sufficient time to comply with these standards. As a result, the reconsideration proposal included a provision that would set new, later deadlines for meeting the standards set forth in the reconsideration proposal. While this is subject to the public comment
process, it was the EPA's intent in the proposed rule to allow the compliance clock to "reset" to provide the industry the full length of time - three years - provided in the Clean Air Act for compliance with the rules once they are finalized.

For a copy of Administrator Jackson's letter to the Senator, click here

 

 

Court Throws Out EPA's Self-Imposed Stay of Boiler MACT

On February 11, 2011, EPA issued two rules regulating hazardous air pollutants (HAPs) from thousands of industrial sources.  First, the "Boiler MACT" imposed standards on industrial, commercial and institutional boilers and process heaters.  Second, the "CISWI" imposed standards on commercial and industrial solid waste incinerators.   

Both rules were very controversial due to their wide coverage and cost of compliance.  Industry complained that EPA, on prior versions of the rules, failed to analyze real world data regarding standards.  Their failure resulted in standards that industry charged no facility had actually achieved in practice.

Environmental groups alleged that the rules were long overdue and EPA was simply delaying the rules due to pressure from industry.  When the rules were issued in February 2011, the Sierra Club filed challenged in the Court of Appeals.  EPA also announced that it was reconsidering the rules to take more time to analyze the data provided by industry during the comment period.

On May 18, 2011, two days before the rules were to take effect, EPA self-imposed a stay on the effectiveness of both rules.  EPA's stay was referred to as its "Delay Notice."  In the federal register announcement regarding the Delay Notice, EPA said the stay would be effective until judicial review proceedings were over or it completed its reconsideration of the rules, whichever occurred earlier.

EPA said the Delay Notice was necessary in order to avoid requiring thousands of facilities to comply with standards that soon may change.  EPA argued that once facilities began making investments to meet the standards, those investments would be irreversible.

The Court did not find any of EPA's justifications for the Delay Notice valid.  The Court even denied EPA's request to remand the Delay Notice so that EPA could provide better justification for the action.  The Court threw out the stay and issued an order requiring EPA to take immediate action to comply with its order. (Click here for Court's decision throwing out the stay of the Boiler MACT)

EPA had indicated it was going to complete is reconsideration by April 2012.  Therefore, it was able to delay the rules for most of the period it originally intended to complete its reconsideration.  However, now EPA will have no choice but to issue both rules.  More importantly, thousands of faculties across the country will likely be facing compliance deadlines with the clock beginning to tick this Spring.

Ohio Could be at the Center of a Major Energy Transformation from Coal to Natural Gas

U.S. EPA finally issued its long awaited air pollution regulation aimed at reducing mercury emissions from coal-fired power plants- Mercury and Air Toxics Standards (MATS).  MATS sets specific numeric emission standards for mercury and other air toxics from coal-fire power plants  25 megawatts in size or larger.

MATS will apply to some 1,400 generating units across the country.  The rules carry with them a $9.6 billion dollar price tag.  Power produces have until 2015 to 2016 to comply with the new regulations.

The new regulation, along with a series of earlier federal regulations, have made coal power generation more expensive. Meanwhile, the rich deposits of natural gas in the Marcellus and Utica Shale have kept natural gas prices down. 

Ohio could be at the center of a major shift in power generation.   Right now Ohio's baseload power generation tilts heavily in favor of coal with 86% of its generation from coal and only 2% from natural gas.  However, the scales may be starting to go  in favor of natural gas.  MIT's recent study on natural gas showed its role will increase significantly the coming years in the energy sector. 

On June 8, 2011, AEP released its compliance plan which calls for retirement of coal plants and new natural gas capacity.  According to SourceWatch:

 AEP’s compliance plan would retire nearly 6,000 megawatts (MW) of coal-fueled power generation; upgrade or install new advanced emissions reduction equipment on another 10,100 MW; refuel 1,070 MW of coal generation as 932 MW of natural gas capacity; and build 1,220 MW of natural gas-fueled generation. The cost of AEP’s compliance plan could range from $6 billion to $8 billion in capital investment through the end of the decade

In 2011, many power producers announced they were closing Ohio coal-fire generating facilities.  These include:

  • AEP's Picway
  • AEP's Conesville
  • AEP's Muskingham River
  • Duke Beckjord
  • DP&L Hutchings

According to an Associated Press survey of 55 power producers, more than 32 mostly coal-fired power plants in a dozen states would close. The survey indicated no threat to the reliability of the nation’s power system.

Pennsylvania is about decade ahead of Ohio in its shift toward natural gas due to the fact the Marcellus shale formation is proven and the Utica shale is not.  Pennsylvania offers a glimpse into Ohio's future.

Chart shows Pennsylvania's ten fold increase in natural gas power generation.  In a decade, natural gas has gone from 2% of Pennsylvania's power generation to 17%. 

Meanwhile, coal power generation in Pennsylvania has seen a corresponding drop from 56% to 47% of overall generation in the State.   (Chart- Investment U "Pennsylvania leading the shift to natural gas)

 

State Halts Applications for Brownfield Grant Program

Yesterday, the Ohio Department of Develop put the following notice on the Clean Ohio Fund webpage:

NOTICE

Effective immediately: The Clean Ohio Assistance Fund is no longer accepting applications. If you have a project and would like to discuss other funding opportunities please contact us.

Back in October, Governor Kasich announced that he was redirecting the funding for the Clean Ohio program to his JobsOhio economic development program.  Funding would remain for one additional round of the Clean Ohio Revitalization Fund which provides up to $3 million in clean up grants for brownfield redevelopment.. 

In addition, funding for the Clean Ohio Assistance Fund (COAF) was thought to last through June 2012.  However when the announcement was made that funding was shifted to JobsOhio it cast doubt on the future of the Clean Ohio program.  As a result, the Department of Development was flooded with COAF applications in December.  No one wanted to risk missing what could the last of the Clean Ohio funding. 

Due to the rush of applications, all available funding was already allocated in December for the COAF program.  Several projects that were also seeking funding were told they were too late.

With the last round of CORF this month and the announcement ODOD is no longer accepting applications for the COAF program, the Clean Ohio program in Ohio is effectively closed.  This announcement is disappointing since the program was one of the most successful in the country in spurring revitalization of brownfield properties. 

In November, the Governor's spokesperson indicated the Administration was looking to find new revenue to continue the program.  No such funding has been identified to date.  The prospects for finding new revenue must be very uncertain because the Department is not even allowing developers to submit applications to form a line when funding does come available. 

Signs point that the Country and State's economy may slowly be turning the corner. If that is indeed the case, It would be nice to have the tools in place to direct new development to abandoned sites and contaminated properties which populate Ohio's urban core.

 

Study Reveals Environmental Issues in Oil & Gas Leases

There was an excellent article in the New York Times discussing the issues homeowners and landowners are facing when signing oil & gas leases- Learning Too Late of the Perils in Oil & Gas Leases

The Times reviewed 111,000 oil & gas leases from Ohio, Pennsylvania, New York Texas and West Virginia.  It found many of the leases contained very unfavorable terms for landowners and homeowners who sign up with drilling companies.  Many of the issues pertain to the potential environmental problems that may happen once drilling commences or even after work is finished at the property.

Concerns identified included:

  • less than half the leases compensate for water contamination;
  • many lack language to protect against livestock and crop damage;
  • grant driller broad rights to build road, store chemicals and even leave waste in place once drilling has ceased.

Not discussed in the article are other issues that need to be considered by landowners when negotiating leases. 

First, even if the lease contains language which entitles the landowner to compensation if environmental contamination or other property damage occurs, does the company really have the resources to pay?  Its possible the corporate structure is established to prevent liability from flowing to the parent corporation.  

Second, what happens if you neighbors sue you claiming environmental contamination, nuisance or property damage?  Does the lease provide any guarantee that your attorney costs will be paid? 

Landowners are constantly hearing about the opportunities associated with the Marcellus and Utica shale deposits.  However, are they protecting themselves properly in the event something goes wrong?   

Kasich Administration Looking to Replace Brownfield Funding

The Clean Ohio Council awarded half the available funds for brownfield redevelopment for fiscal year 2012 two weeks ago.  As discussed in prior posts, available funding is running out in the next few months.

The future of State brownfield funding became uncertain when the Kasich Administration shifted funding from the state's liquor profits to JobsOhio.  I was interviewed for an article appearing in Gongwer last week discussing the future of the program.   It is clear from the article that the Administration is trying to replace the liquor profits with different funding to continue brownfield grants beyond fiscal year 2012. 

Ms. Sabatino said the administration has indicated the program will continue, although it has yet to identify an alternative source of funding. "I know they're actively working on it as we speak," she said.

Kasich spokesman Rob Nichols added, "Helping put brownfields back to work to create jobs is valuable and something Ohio will continue to do. As we transition from state-run job growth efforts to efforts run by the private-sector experts at JobsOhio, we're evaluating these programs to make sure we have the right
tools to serve job creators and to make sure taxpayers are getting a good return on their investment."...

The revitalization program provides reimbursements to communities working to clean up brownfield sites, and interest in the program has been high, DOD Community Services Division Chief William Murdock said. "There's more demand than there is supply, and that's a really good sign," he said.

Mr. Koncelik said, however, the few projects that were denied funding in this round could multiply should the future financial source be smaller than the previous one.
"A new revenue source may dramatically cut down the available funding, and won't have as robust a program, not as many projects will happen," he said, adding it could be half a dozen or more projects that are rejected in future rounds.

I am glad to see the future of the program is starting to get coverage in various publications.  It is an important public policy issue that deserves such coverage.

(Gongwer article provided with permission of publisher)

Loans Versus Grants to Spur Brownfield Redevelopment

Current Debate Regarding the Future of the Clean Ohio Program

The Kasich Administration has announced that it is re-evaluating the Clean Ohio program.  The next round of the Clean Ohio Revitalization Program (Round 12) will be the last.  Also, funding under the Clean Ohio Assistance Fund, which pays for sampling on brownfield properties, is likely to run out as soon as February 2012.

It appears the Administration is discussing other funding sources that may allow the program to continue.  (See Clean Ohio Funding End 2012....What Next?)  Last week, an article in Crain's Cleveland discussed the potential end of the program:

Ohio Department of Development spokeswoman Katie Sabatino said the state considers these successful programs, but is evaluating its options for assisting with the redevelopment of brownfield sites. Of the Clean Ohio Fund in particular, she said, “The Ohio Department of Development is working with the (Kasich) administration to chart a path to assist with brownfield issues....."

“It was supposed to end June 2014, but word out of Columbus is it will end sooner,” said one observer who asked not to be identified because he's shepherding brownfield projects still under review. “I'm very concerned about them pulling the rug out from under us.”

 In the article, it states that the Administration may be interested in moving towards loans instead of grants. 

In addition, Mark Kvamme, chief investment officer of JobsOhio, is said to prefer loans over grants, according to a half-dozen economic development professionals who work with the state's programs. He was not available last week for comment.

A similar change is under way at the Third Frontier Commission, which runs loan and grant programs for technology companies. Crain's reported in June that Mr. Kvamme was behind recommendations the commission is adopting to move to loans from grants.

Advocates of the change say loans not only stretch the reach of public funds, but also cause applicants to be more discerning about what they propose when they're on the hook to pay the money back.

Loans versus Grants

The problem with loans is that the require the developer or company considering a brownfield to pay for the entire cost of investigation or clean up.  Total clean up costs can range from $500,000 to $5 million or more.  This is the cost just to clean up the land, not the overall development costs. 

If developers and companies are required to utilize their own funding to pay for all the clean up and investigation costs, most will look to greenfield sites instead of re-utilizing urban properties that have pre-existing contamination.  Heavy industrial properties will simply sit idle unless the value of their location is so great it outweighs the clean up costs.  This is an unlikely scenario for the vast majority of brownfield sites.

Ohio already has a brownfield loan program that almost no one is currently utilizing- Ohio Water Development Authority's Brownfield Loan Program.  Under the OWDA program you can obtain a low interest loan for sampling (up to $500,000) or clean up ($5 million).  Despite the fact more sites are eligible for OWDA's program than Clean Ohio, OWDA has had trouble attracting interest in the program.

Under the grant program, applicants still have "skin in the game."  Under the Clean Ohio program, applicants are required to provide a 25% match.  Paying 1/4 of the clean up costs makes many for brownfield sites attractive to development. 

Future of Clean Ohio

Funding had been available for Clean Ohio to continue until July 2013.  However, as discussed in the Crain's Article funding has been shifted to other priorities. 

Word is the Kasich Administration is looking for a funding source to continue a brownfield redevelopment program.  The Administration may also be overhauling the program. Let's hope that what ever emerges provides a real opportunity for our urban core to attract development.

Miceli Dairy Project Highlights the Benefits of the Clean Ohio Program

Last Friday, I attended the Clean Ohio Council meeting with my client Miceli Dairy Products, Inc. (Miceli Dairy).  I had worked with Miceli Dairy over the last couple years on evaluating five parcels of property adjacent to their current facility on which the Dairy would like to expand its operations. 

The Dairy submitted an application to receive approximately $3 million in grant funds to assist with demolition, clean up and installation of infrastructure on the brownfield parcels.  The Dairy's application was competing with fourteen (14) other brownfield redevelopment projects from around the State. 

The fourteen projects were in competition for the available funding.  Each project is scored using various factors such as how much contamination is being cleaned up, number of jobs, etc.  In the end, the Miceli application was the number one project in the State and the Council voted to fund the application.  (Click here for press release from the Clean Ohio Council)

Miceli Dairy's expansion is a great story. Did you know that Miceli is the largest ricotta cheese manufacturer in the U.S.?  The Company has a wonderful Cleveland history that is best described in the Plain Dealer story profiling the Dairy's expansion plans. 

However, without the Clean Ohio program the expansion may never happened in the City of Cleveland.

Why the Project Wouldn't Have Worked without Clean Ohio

During the Clean Ohio Council meeting several comments were made the the Miceli project was one of the most complicated to every go through the program.  Here were some of the issues that complicated use of the brownfield parcels for expansion:

  • Two businesses operated on the parcels- a drum reclamation facility and plating operation;
  • Both businesses were the subject of environmental enforcement actions by the Ohio Attorney General's Office;
  • No environmental sampling has been performed prior to the project so it was impossible to know the levels of contamination present;
  • Liens were on the properties that exceeded $1 million dollars;
  • Hazardous waste units and drums were located on the parcels that needed to be cleaned and that work is ineligible for Clean Ohio funding;
  • Buildings in poor condition were located on site that made it difficult to obtain samples; and
  • Large debris piles were across the site.

All of these issues had to be addressed for the project to move forward.  It is clear that without funding through Clean Ohio the costs of sampling and clean up alone would have prevented expansion onto these parcels.  Without funding it was quite possible Miceli may have been forced to look outside Cleveland to expand its operations.

(Map:  From Cleveland Plain Dealer Article cited above)