Interim U.S. EPA Enforcement Guidance- Defer to the States

On January 22, 2018, U.S. EPA's Assistant Administrator issued a memorandum to all U.S. EPA Regional Administrators that contained interim guidance on enforcement of environmental violations by State EPAs and the federal EPA.  The interim guidance is a significant shift away from the traditional federal/state balance on enforcement giving much greater leeway to the States. 

U.S. EPA has always been active in enforcement in states, even states that have delegated programs.  EPA traditionally has set its own enforcement priorities, performed its own inspections and proceeded with enforcement when it finds violations.  While it may inform the states of its activities, it generally would not defer to the states once it initiates enforcement. 

Often the federal EPA can be more stringent than the states in seeking corrective measures and/or civil penalties.  States are viewed as being more reasonable and open to considering practical compliance issues and costs of compliance.

The interim guidance signifies a shift away from this traditional approach.  Specifically, the memorandum makes the following two major statements:

  • With respect to inspections and enforcement, the EPA will generally defer to authorized States as the primary day-to-day implementer of their authorized/delegated programs. except in specific situations.
  • Where the EPA identifies violations at a facility, but the State requests that it take the lead for
    remedying the violations, the Region should defer to the State except where the EPA believes that some EPA involvement is warranted (as described in paragraph 2, above)

These statements are signify a pretty dramatic shift towards the states in controlling enforcement process within its borders.  In particular, the idea that if the EPA identifies violations and informs the states, the state can request to take the lead.  In this instance, the guidance makes clear the EPA should defer to the states except in special circumstances that are outlined in the memorandum.

The memorandum is just another indication that the Trump Administration wants to shift primary regulatory and enforcement authority to the states.  


New Rule Delays Implementation of the 2015 WOTUS Rule

On January 22, 2018, the Supreme Court ruled in National Assoc. of Manufacturers v. Department of Defense that federal district courts have original jurisdiction to hear challenges to the 2015 Obama Administration Waters of the U.S. (WOTUS) rule which defined the extent of federal jurisdiction over streams and wetlands under the Clean Water Act.  After the ruling, the Trump Administration was concerned that the 2015 WOTUS Rule may be effective before it completes it's own process to remove the rule and promulgate its own rule defining the extent of federal jurisdiction over waters in the United States.  

On February 6th, the EPA and Army Corps of Engineers adopted a new rule which establishes an "applicability date" of the 2015 WOTUS Rule.  The applicability date as established by the rule is February 6, 2020 which will provide time for the Trump Administration to complete the process of unwinding the 2015 WOTUS Rule and adopt its own rule defining federal jurisdiction.

The effective date of the 2015 WOTUS Rule was August 28, 2015, however, the Agency's assert that the 2015 WOTUS Rule did not establish an "applicability date."  Therefore, the EPA and Army Corps assert that, until the applicability date passes, the Agencies will define waters and wetland falling under federal jurisdiction “consistent with Supreme Court decisions and practice and as informed by applicable agency guidance documents (the 2003 and 2008 guidance documents) as the agencies have been operating pursuant to the Sixth Circuit’s October 9, 2105, order, and the North Dakota district court’s injunction.” (The North Dakota District Court issued an injunction preventing implementation of the 2015 WOTUS Rule).

The Trump Administration believes the "applicability" rule allows the regulatory interpretation of jurisdiction under the Clean Water Act in effect prior to the 2015 WOTUS Rule to remain in place.  It is very likely this rule will also be challenged on the basis the August 28, 2015 effective date of the 2015 WOTUS Rule cannot be delayed in this manner.

Regulatory Reform- Elimination of the "Once In Always In" Policy

President Trump's efforts at regulatory reform continued with the announcement on January 15, 2018 that the U.S. EPA would withdraw its "once in, always in" policy for classification of Major Sources of hazardous air pollutants (HAPs) under section 112 of the Clean Air Act.  Newly sworn in Assistant Administrator of EPA's Office of Air and Radiation, Bill Wehrum, made the announcement.  Anticipating forthcoming legal challenges Mr. Wehrum stated that the revocation of the policy was "based on a plain language reading of the statute that is in line with EPA's guidance for other portions of the Clean Air Act."

What is a Major Source of HAPs?

Under the Clean Air Act a “Major Source” is a air pollution source that has the potential to emit of 10 tons per year of any HAP or 25 tons per year or more of any combination of HAPs. Major sources must obtain a Title V permit which is a highly complex federal permit with stringent reporting and record keeping requirements. Any source of HAPs below these thresholds is classified as an "area source" and is subject to far less regulatory requirements.  

What is the "Once in, Always In" Policy?

Historically, U.S. EPA allowed sources to voluntarily limit emissions below the HAP "Major Source" thresholds through a permit (referred to as a "synthetic minor permit" because it caps emission below thresholds).  However, sources were required to cap emission with such a permit before the compliance date established under Clean Air Act regulations, specifically, standards known as Maximum Achievable Control Technology (MACT).  If a source couldn't obtain a permit or limit its emissions due to production or other business needs, the source was always classified as a "major source."  The source was not allowed to later find ways to reduce HAP emissions and be declassified as a "Major Source."

What does U.S. EPA's Revocation of the Policy Mean?

Under U.S. EPA's new guidance, facilities maybe able to opt-out of the major source MACT standards and Title V permitting requirements at any time.  Sources that are currently "Major Sources" now have incentive to finds ways to control or reduce emissions to reduce their regulatory burden.  

What is Likely to Happen Next?

U.S. EPA says it wants to put its latest interpretation into rules to make it harder for the next Administration to revert back to the "Once in, always in" policy.  It plans on publishing notice in the Federal Register to take comments on adoption of such a rule.  

Like many of the Trump Administration's regulatory reforms of EPA, expect the latest announcement to be challenged in the courts.  

Supreme Court Ruling Creates Even More Uncertainty on Waters of the U.S.

This week the U.S. Supreme Court ruled in Nat’l Ass’n of Mfrs. v. Dep’t of Def., No. 16-299 that district courts have jurisdiction to hear challenges to any rule that attempts to define "Waters of the United States" for purposes of determining the scope of coverage of the Clean Water Act.  As detailed on this blog previously, ever since the Supreme Court's prior decision in Rapanos, there has been tremendous uncertainty as to which streams and wetlands fall under federal jurisdiction.

The Obama Administration attempted to end the uncertainty by through the Clean Water Rule which broadly defined the federal jurisdiction.  Even before the rule went into effect, multiple legal challenges were filed seeking to block the rule.  

Before a decision could be reached on the merits of the rule, the proper venue for challenges to the rule had to be decided.  The Sixth Circuit ruled the proper venue was in the circuit court of appeals, not district courts.  However, the Supreme Court overturned the lower court ruling sending the challenge back to district courts.  

The ruling also removes the Sixth Circuit's injunction against administering the Clean Water Rule.  With the injunction removed, the Clean Water Rule becomes effective in all but 13 states (Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, South Dakota and Wyoming).  These states are subject to a separate preliminary injunction which was issued by the federal district court in North Dakota. 

The Trump Administration also issued a rule to unwind the Clean Water Rule which will also likely be challenged, now in district courts.  The Administration has promised a second rule defining the scope of jurisdiction more narrowly than the Clean Water Rule.  

What the Supreme Court decision means is the district courts will likely be awash in legal challenges to both the Obama Administrations Clean Water Rule as well as the Trump Administration's rules.  It will take years for all this litigation to percolate back up to the Supreme Court for a ruling on the merits.  In the meantime, industry and land owners will be forced to navigate uncertainty.  

Jobs Sprawl and Brownfields

 A very interesting article appeared in Crain's Cleveland Business by Jay Miller discussing "jobs sprawl" and the lack of easy access to jobs.  

Brad Whitehead, president of the Fund, points to a study by the Center for Neighborhood Technologies, a Chicago nonprofit that focuses on making cities work better, that found that housing costs in Greater Clevelanders are low, but people here spend more of their money on housing plus transportation — 41% of their income — than people in Boston, 38%, or New York, 39%.

Similarly, a 2015 study by the Brookings Institution, a Washington, D.C., think tank, found that between 2000 and 2012, the number of jobs near the average person in the Cleveland metropolitan area declined by 26.5%, the steepest decline among 96 metropolitan areas. The Akron metro ranked 84th. Part of that loss of job access is the result of an overall decline in jobs in the region, a 2.5% loss between 2002 and 2014, according to the U.S. Census, and part is the movement of jobs, of employers, from the central cities.

And finally, the Federal Reserve Bank of Cleveland in a 2015 study found that low-skilled and low-paying jobs are the hardest to get to. It also found that, "Millennials and baby boomers alike want more accessible communities, whether that means a workplace within reach of transit or downsizing from large suburban homes to areas where amenities important to them are just a walk away."

I found it amazing that the Clevelanders spend more money on housing plus transportation than major cities like Boston or New York.  As long as Ohio can't leverage the lower cost of living in the state as a true strategic advantage, Ohio will never be able to compete with major cities like Boston, New York or Chicago.

The images below have appeared before on this blog, but they dramatically show the issues with urban sprawl as well as jobs sprawl.  The graphic on the left is developed land in Cuyahoga County in 1948 and the graphic on the right is developed land in 2002.  As development spreads out, the ability of the urban population to access jobs becomes more difficult.  










The link between avoiding job sprawl and brownfields is unmistakable.  The more we discourage redevelopment of our inner core cities, the more we push jobs out into greenfields which fosters jobs sprawl.  Also, without an growing population and affordable transportation to jobs, large employers face increased challenges finding qualified candidates to fill job vacancies.  If the problem persists, employers look to relocate where they can ensure vacancies will be filled.

While Ohio used to be a leader in promoting brownfield redevelopment, a combination of factors over the last several years has pushed us to the back of the pack, even when compared to neighboring states like Michigan.  The combination of factors, all which have been discussed on this blog, include:

  • Clean Ohio, a national model in brownfield redevelopment incentive programs, sunset approximately 5-6 years ago leaving behind no definitive brownfield redevelopment program.  Between 10-20 major brownfield redevelopment projects were occurring per year over the decade Clean Ohio was in place
  • A lack of tax policy that promotes brownfield redevelopment.  The most significant tax benefit, the VAP 10-year tax abatement, is too cumbersome and too limited in scope.
  • JobsOhio, while the program has some major advantages and is currently has the best incentives for brownfields, the JobsOhio Revitalization Program has steep eligibility requirements and does not focus on specifically targeting brownfields for redevelopment
  • Local brownfield programs have dwindled- For example, Cuyahoga County has basically done away with its brownfield program and forgivable loans, a key incentive to promote brownfield redevelopment
  • VAP- Controversy surrounds the VAP program and whether it still provides the legal liability protection envisioned when the program was launched more than two decades ago
  • Vapor Intrusion-  Greater federal and state scrutiny on vapor intrusion issues has increased liability concerns for property owners and redevelopers looking to reuse brownfields

As we head into an Gubernatorial election year, more voices need to be raised discussing issues like jobs sprawl, brownfields and how to get Ohio's population growing again.  While tax policy, education and economic development are critical to Ohio's future, making sure we are putting new jobs in locations that can easily be accessed needs to be a key strategy in Ohio. 

Ohio EPA Responds to Concerns Regarding the VAP and the Agency's Response to TCE

[SPECIAL BLOG POST: Ohio EPA asked to publish a guest post on the Ohio Environmental Law Blog regarding recent developments pertaining to the Agency's response to sites with trichloroethene (TCE) and the Voluntary Action Program (VAP).  The Ohio EPA response is posted below in its entirety]

In August 2017, Ohio EPA announced to Certified Professionals (CPs) that letters would be sent to owners of trichloroethene (TCE) contaminated properties. The intent of the agency’s action is to inform property owners that U.S. EPA had lowered the acceptable indoor air levels for TCE, and updated the federal technical guidance on assessing vapor intrusion to indoor air stemming from soil and/or ground water contaminated with solvents such as TCE. In the letter, Ohio EPA requested that owners evaluate the conditions on their property to ensure TCE vapor intrusion was not harming people working or living on their property or that nearby neighbors were not affected. While the intent of the letter is to inform the property owner in order to prevent human health risks, this announcement caused some concern among the Voluntary Action Program (VAP) community, leading some to mistakenly believe that Ohio EPA was undermining the value of a Covenant-Not-to-Sue (CNS) issued through the VAP.

While most acceptable indoor air levels for chemicals are based on a chronic risk, or long-term exposure, the change made by U.S. EPA regarding TCE was based on an acute risk, or short-term exposure, particularly to women with developing fetuses. This change presented a concern to Ohio EPA because fetal heart anomalies were determined to occur with only a few weeks of exposure to breathing TCE above the health standards.  Therefore, prompt attention to this new standard and exposure timeframe required a timely and thorough reevaluation of all known sites that may have TCE contamination. As part of this review, Ohio EPA contacted the property owners, informing them of this change, and asking them to investigate the conditions, and to make sure that people at and near their property were not being harmed. This action is consistent with the responsibility of the Director of Ohio EPA to ensure that the health of Ohio’s citizens is adequately protected.

Ohio EPA’s interest is in public health and not to invalidate property owners’ CNSs as part of this reevaluation. To date, no CNS has been revoked under this reevaluation, nor is Ohio EPA requiring a property with a CNS to update to the new federal standard for TCE.  Ohio EPA is working cooperatively with property owners to ensure that public health is protected. Our request for property owners to look at the information they have, and, if necessary, take samples, is in fact a good and necessary choice for these property owners. Understanding that a property is adequately protective allows an owner to use or redevelop a property with the certainty that it won’t be harmful to users or neighbors.  It protects the value of the property, enables safe and economically feasible redevelopment of contaminated property, and allows reduced remediation without having to “turn a blind eye” on future liability and injury.

The VAP has always acknowledged the Director’s responsibility to address imminent health threats; the reevaluation of potential exposure to unsafe levels of TCE is not a separate, or new legal authority.  Each CNS that is issued by Ohio EPA states, “Nothing in the Covenant limits the authority of the Director to request that a civil action be brought pursuant to the ORC or common law of the State to recover the costs incurred by Ohio EPA for investigating or remediating a release, or threatened release, of hazardous substances or petroleum at, or from the Property, when the Director determines that the release or threatened release poses an imminent and substantial threat to public health or safety or the environment.”  This provision allows Ohio EPA to evaluate for current, or likely imminent, health threats, and recover expended costs when a property owner is uncooperative and an imminent health threat may exist.

Ohio EPA is aware that some members of the public may have mistakenly inferred that a CNS issued after the submission of a No Further Action Letters (NFAs) is no longer worthwhile for property owners to obtain.  That assumption is false. Furthermore, it has been stressed that the Ohio EPA VAP is losing relevance, with the proof offered being the lower number of NFAs that have been submitted to the Ohio EPA in the past year.  That assumption is also false. Ohio EPA’s position is that NFAs submitted for a CNS is not the only measure of the success of the VAP.  The number of NFAs submitted for a CNS fluctuates over time and can be impacted by a variety of factors. One of the factors that has the greatest impact is the implementation of a new rule change. This results in a significant increase in NFA submittals, like the one that occurred in 2014.  Another factor is the change in brownfield funding available in the state. Loss of sources of funding, such as the Clean Ohio Fund, will continue to reduce the number of NFAs submitted to Ohio EPA in the coming years. CPs have indicated that only 10 percent of their VAP work is ever submitted to Ohio EPA for CNS, because volunteers, lenders and insurance companies are comfortable with work done by VAP CPs who follow VAP rules and guidelines. These institutions don’t require a CNS from Ohio EPA for there to be value in the program. Ohio EPA considers the program a success knowing that the use of the program rules and guidelines provide participants that level of comfort. 

In summary, Ohio EPA is not taking this action due to a meaningless bureaucratic function. Ohio EPA is committed to ensuring protectiveness of human health and the environment, particularly when significant questions such as TCE exposure are raised by the best science and research available from US EPA. The VAP has shown over the past 22 years, that the program is able to protect human health without putting a stop to redevelopment, which demonstrates that citizens, owners, workers, and neighbors can be adequately protected without invalidating the VAP program.

Unwind of WOTUS Gets Us Back to the Beginning

The Trump Administration has promised massive deregulation, in particular reductions in environmental regulations. A major target of the Trump Administration's deregulation agenda is the Obama Administration's Waters of the U.S. Rule (WOTUS) which defines which wetlands and streams are federally regulated.

However, as described in this post, despite the controversy, all of the regulatory activity over the last several years really just leaves us in the status quo.  

CWA Defines Jurisdictional Waters

Section 301(a) of the Clean Water Act (CWA) prohibits discharges of pollutants to "navigable waters" without a permit.  See, 33 U.S.C. Section 1311(a), 1362(a).   The CWA defines "navigable waters" as "waters of the United States..." See, 33 U.S.C. Section 1362(7)

However, what exactly constitutes "waters of the United States" has been controversial since passage of the CWA in 1972.  

Supreme Court Weighs in Three Times

The Supreme Court has addressed the issue of "waters of the U.S." on three separate occasions:

  • Adjacent waters- In the Court's initial decision, it captured the issue of the extent of federal jurisdiction succinctly- "Between open waters and dry land may lie shallows, marshes, mudflats, swamps, bogs--in short, a huge array of areas that are not wholly aquatic but nevertheless fall far short of being dry land.  Where on this continuum to fine the limit of "waters" is far from obvious." The Court said the term "navigable" in the statute is of little import.  The history of the CWA shows Congress intended broad regulations of waters. In this case, the Court concluded the wetlands adjacent to "waters of the U.S." were federally regulated.  See, United States v. Riverside Bayview Homes 474 U.S. 121 (1985)
  • Habitat for Migratory Birds- The Court determined the Army Corps went too far trying to assert federal regulation over intrastate waters on the basis the waters provide habitat for migratory birds. SWANNCC v. U.S. Army Corps of Engineers, 531 U.S. .159 (2001)  
  • Scalia and Kennedy Tests-  The third time the Court visited the issue it could not get five justices to agree on the extent of federal jurisdiction under the CWA.  Two tests emerged- Justice Scalia's and Justice Kennedy's.  Justice Scalia limited federal jurisdiction to navigable waters, adjacent wetlands and non-navigable streams that are permanent flow year round or at least seasonally. Justice Kennedy extended jurisdiction further, to any waters with a "significant nexus" to navigable waters.  Rapanos v. U.S., 547 U.S. 715 (2006)

Post-Rapanos the uncertainty and litigation continued over the extent of federal regulation.

Obama WOTUS Rule

In 2015, the Obama Administration attempted to put an end to the uncertainty by defining "waters of the U.S." by rule (WOTUS).  Under the proposal federally regulated waters included the following:

  • Streams with perennial, intermittent or ephemeral flow
  • Defined bed, bank and an ordinary high water mark
  • Contributes flow, either directly or through another water, to a jurisdictional water
  • Part of a network that drains to a jurisdictional water
  • Excludes man-made ditches

Those opposed to the rule felt any small stream or water could meet the definition triggering federal regulation over even incidental creeks and streams or even drainage ditches.

The rules was immediately subject to over 20 legal challenges.  On October 9, 2015 the Sixth Circuit issued a stay of the effectiveness of the rule while its legality was determined.  

Litigation is before the Supreme Court to determine not the legality of the rule, but the proper venue the rule can be challenged.  Despite those who argue the Trump Administration is rolling back protections of waterways, the WOTUS rule never went into effect.  Instead, we still determine the extent of federal jurisdiction using the Scalia and Kennedy tests from Rapanos.

Trump Executive Order

Despite the fact the WOTUS rule was not in effect, on February 28, 2017, President Trump issued an executive order titled "Restoring the rule of Law, Federalism and Economic Growth by Reviewing the "Waters of the U.S. Rule."

The Executive Order had two goals:

  1. Rescind WOTUS;
  2. Issue an new rule interpreting "Navigable Waters" consistent with Justice Scalia's test in Rapanos.

Step 1- Rescinding WOTUS

July 27, 2017, EPA proposed revocation of WOTUS.  EPA accepted public comments on the proposed rule through September 27th.  

Step 2- Propose a New Definition of WOTUS

The next step will be for EPA to propose a definition of the rule that drops the Kennedy "significant nexus" test and limits jurisdiction to the test articulated by Justice Scalia.  However, similar to WOTUS, this rule will almost certainly face numerous legal challenges.

Back to the Beginning?

While the legal challenges work their way through the courts over the next several years, the law will not have changed since Rapanos was decided in 2006.  Both the Kennedy and Scalia tests for jurisdiction will be used by all circuits.  

For over forty years the issue of how far to extend federal jurisdiction over waters has not been conclusively decided.  It appears this issues will not have greater clarity for the foreseeable future.  


Has Ohio Undermined Its Voluntary Cleanup Program?

As discussed in my prior post, in September Ohio EPA announced that it would be sending "hundreds of letters" to property owners that have trichloroethylene  (TCE) contamination, including property owners that cleaned up their property under the Voluntary Action Program (VAP).  At the September meeting of VAP professionals the Agency announced that it could take legal action against property owners with TCE contamination even if the property owner received a Covenant-Not-to-Sue (CNS) under the VAP (i.e. a legal release).

Since the September meeting many in the environmental community have questioned whether the Agency has undermined a cornerstone of the program- the ability to rely on a legal release through a VAP CNS that no additional cleanup would be required.  The Agency was careful to state it would not be reopening the CNS to apply the more stringent TCE VAP cleanup standard.  The Agency still agrees the VAP CNS locks in the cleanup standards once the CNS is issued (even if standards get more stringent for certain types of contamination based on the more up-to-date science).

The ability to lock in cleanup standards has always been viewed as one of the most significant incentives for submitting a VAP No Further Action (NFA) letter to Ohio EPA to obtain a CNS.   Without the ability to rely on the legal release, the VAP would provide very little incentive to make public information about levels of contamination at your property.  

While the Agency said it would not reopen a CNS issued under the VAP to apply the more stringent TCE cleanup standard, the Agency also said it has an obligation to protect public health and the environment.  The Agency indicated it has separate legal authority, outside the VAP program, to take action at properties it believes present a threat to public health and the environment.  The Agency stated it could perform cleanup itself and recover its costs under this separate legal authority if property owners refused to do anything more to address TCE at their sites.

Legal End Around?

While Ohio EPA says it would not reopen VAP covenants to apply more stringent cleanup standards, it said it could use other legal authority to take action to address TCE.  Most property owners won't care which legal authority the Agency utilizes. Most will be upset that they are being told to perform more investigation or cleanup after they thought they had met all their obligations.

Does this the Agency's recent announcement weaken the VAP program?  It certainly diminishes the incentive of entering the program.  

For years, many outside attorneys and consulting firms have advocated simply cleaning up the property to VAP standards and obtaining an NFA, but electing not to submit the NFA to Ohio EPA to obtain a CNS.  What are the perceived advantages to this approach:

  • Meeting VAP standards provides a technical argument that the property does not present a threat to public health or the environment;
  • While not a legal release, the Ohio EPA or U.S. EPA would have a much more difficult time taking enforcement against a property that is deemed protective of the public health or the environment (as indicated by issuance of the NFA);
  • By not submitting the NFA to Ohio EPA all sampling data can remain confidential.  No information will be accessible by the public regarding the condition of the property; and
  • By not submitting the NFA, the owner avoids the costs associated with Ohio EPA's review of a CNS

While there are advantages to not submitting an NFA to obtain a CNS, these must be balanced against the limitations of such an approach:

  • The CNS still locks in cleanup standards.  Obtaining only an NFA leaves the property open to application of more stringent cleanup standards;
  • A CNS still provides a much stronger legal defense against EPA enforcement for cleanup
  • A property with a CNS is more easily transferred to a new owner because the property still has a sign-off from the Ohio EPA that the property meets standards;
  • Financing is more easily obtained for a property with a CNS versus an NFA; and
  • While the VAP is self-implementing, it is very common for VAP Certified Professionals and Ohio EPA to disagree over whether the cleanup was sufficient.  Obtaining a VAP CNS provides the assurance the Agency signed off on the cleanup.

This laundry list of pro's and con's make this a complex decision for the property owner.  The recent announcement regarding notices to property owners holding a CNS with TCE contamination adds another factor to be considered.  

The numbers don't lie, the number of VAP CNS have gone down over the last few years. 

VAP CNS Issued by Year

NFA Letters

Requesting a CNS

CNS Issued Review Pending
2014 65 60 2
2015 33 33 0
2016 28 18 7
2017 to date 14 2 12


The cost and complexity of the program results in only a limited number of sites entering the property each year.  As has been discussed in prior blog posts, Ohio need to develop more options to address liability from pre-existing contamination to accelerate reuse of brownfields in Ohio. 


State EPA Federal Permitting and Preemption by FERC

According to a Forbes article in 2016, the Federal Energy Regulatory Commission (FERC) approved almost 40 major pipeline projects across the country, covering 1,200 miles, over 14 Bcf/d of new capacity (total national consumption is around 75 Bcf/d), and over $10 billion in new investment.  Most of these new pipelines are being built in the eastern third of the U.S.  There are three major pipelines currently being constructed or will soon start construction in Ohio.

With all this new construction, a key issue is the interplay between regulation under the Natural Gas Act (NGA) administered by the FERC and State EPA environmental permitting.  In order to expedite construction and avoid duplication in regulation, the NGA preempts much of the State regulatory oversight.  

On August 18th the Federal Court in the 2nd Circuit issued a significant decision regarding state environmental permitting authority and preemption.  The case relates to the State of New York’s permitting authority under the Clean Water Act (CWA).

In Constitution Pipeline Company v. New York State Department of Environmental Conservation, the New York State Department of Environmental Conservation (NYSDEC) denied a stream/wetland permit requested by Constitution Pipeline to construct a pipeline that crossed through New York.  The dispute involved whether less water quality impacts were feasible by avoiding open cuts through streams and wetlands in favor of horizontal directional drilling which goes underneath these resources.  

During the FERC review, NYSDEC submitted comments requesting more HDDs and Constitution Pipeline submitted comments in response favoring the current plans.  FERC agreed with Constitution Pipeline and issued a certificate for the project pursuant to the NGA.  NYSDEC ended up denying the CWA 401 permit on the grounds more HDDs would result in less state water quality impacts.  Constitution Pipeline challenged the denial of the 401 in federal court arguing the NGA preempted the State since the FERC had already determined as part of its review the more HDDs were not feasible. 

The Court noted that the NGA has specific carve outs from preemption for the Clean Water Act.  The Court held that states retain their authority under the CWA and NYSDEC was within its right to deny the 401 permit.   Constitution Pipeline is looking to appeal arguing this gives the State’s veto authority over FERCs decision to approve pipeline routes.

Ohio EPA to Issue Letters Regarding TCE to Property Owners

At a recent meeting of brownfield cleanup professionals, Ohio EPA announced plans to issue letters to owners of property contaminated with TCE.  Ohio EPA says it reviewed thousands of sites and will be issuing letters to "hundreds" of sites where it has information in its files that TCE is present. Based on this review, the Agency intends to send letters in instances where TCE levels may be above recently lowered health risk standards.

While a draft of the letter was not provided, Ohio EPA indicated that the letter would "inform the property owner that TCE may be a health concern at their property."  The letters will request the following:

  • Ask the owner to evaluate the health risks (both on and off their property)
  • Ask that the owner notify the Ohio EPA of their plans of action and results

The letters will trigger a flurry of activity across the state as owners try and figure out the practical and liability implications of receiving notice the Agency believes their property may present a health risk.

Do Standards Move under the VAP?

The Agency said it even will reopen some sites that have completed an acceptable cleanup under Ohio EPA's Voluntary Action Program (VAP). Site owners will receive a letter if the Agency has information in its files that suggests TCE could be present at levels above the new more stringent standard for TCE (even if the property received a legal release based upon the old TCE standard).

At the meeting concern was expressed by brownfield professionals that the Agency was applying the new standard at closed VAP sites.  A core principal of the VAP program was that standards would not change after a volunteer completed a VAP cleanup. It was noted that standards used at the time of cleanup are directly tied to the legal release the property owner receives from Ohio EPA after completing the VAP cleanup (i.e. Covenant-Not-to-Sue or CNS).

With regard to properties covered by a CNS, Ohio EPA stated they hoped the property owner would "do the right thing" even in instances when the cleanup standards applicable at the time the CNS was issued are still not being exceeded.  However, Ohio EPA noted that it retains separate legal authority outside the VAP program to take action and recover its costs at any property the Agency believes may present an "imminent and substantial threat to public health and safety."

Implications for Property Owners and the VAP

The Ohio EPA announcement signifies a further escalation of its efforts to apply the new TCE risk standard to properties that either are not currently undergoing voluntary cleanup as well as those that actually completed such cleanups. The concern among the private sector and property owners is that the new TCE risk standards are very conservative.  Publicly calling out potential health risks both on and off property based on a conservative risk standard raises the liability exposure for property owners across the state.  

There is also concern that the Agency's actions on TCE may have the unintended consequence of dissuading property owners and developers from entering the VAP program.  With a few limited exceptions, Ohio law does not require property owners to make public sampling data obtained through due diligence as part of private transactions.  Therefore, unless a property owner believes the value of the VAP CNS outweighs the liability risks disclosure brings, owners will not be inclined to enter the VAP and make information about their site public.

With hundreds of property owners receiving letters it will be important to get advice from environmental consultants and attorneys regarding the implications for their particular site.