Ohio EPA Proposed Voluntary Action Program (VAP) Rule Changes

Ohio EPA is moving forward with substantial changes to the rules for the Voluntary Action Program (VAP) which governs the procedures and standards for voluntary cleanup of industrial sites and brownfields.  The Agency provided an overview of the changes and its response to public comments last week at the Ohio Brownfields Conference in Columbus.

The Agency describes the changes as mostly providing greater clarity or trying to streamline the processes.  However, many of the changes are significant.  Some of the more significant changes are discussed in this post.

Note:  A detailed overview by Ohio EPA of the proposed rule changes can be accessed here.

Process Changes- Faster Turnaround but Greater Risk of Surprises

Under the current VAP process, when the volunteer is ready to seek concurrence that the property meets VAP standards, they request their consultant submit a No Further Action Letter (NFA).  Under current process, the consultant must submit the NFA along with all of the supporting documentation.  This includes the Phase I property assessment, Phase II property assessment as well as any risk assessment work.  The supporting documentation can be hundreds, if not thousands of pages.

Under the proposed change, a volunteer would submit just the NFA letter (the executive summary of the Phase I and Phase II, operation & maintenance documentation and draft environmental covenant). After the covenant-not-sue (CNS) is issued, the Volunteer would be required to file the supporting documentation.  

While the supporting documentation must be submitted, the Agency would not review it immediately.  Rather, the documentation would be maintained in Ohio EPA's public files.  

Through this process change, the Agency is trying to speed up their review process by reducing the amount of paperwork that must be reviewed prior to issuance of a CNS.   Less review means faster turnaround.  This is good news for developers whose projects or transactions were slowed waiting for the CNS to be issued.  

However, as with everything, there are trade offs.  Ohio EPA is also going to revise its audit protocols.  A VAP audit is similar to a tax audit.  Under a VAP audit, the project is thoroughly reviewed by Ohio EPA, including the NFA and all supporting documentation.  The probability of an audit is highest after the first year the CNS is issued, but can occur anytime.  Under the process change, Ohio EPA proposes to increases the frequency of its audits.

If through the audit, Ohio EPA identifies issues with the investigation or cleanup, a notice is sent to the volunteer.  If those issues are not addressed, the volunteer could lose their CNS.

One outcome of this process change may be more surprises for property owners after they thought a project was finished.  For example, two years after the CNS is issued, Ohio EPA could audit the project, find deficiencies and require more investigation and/or cleanup.  This may come as a major surprise to a new owner who bought the property after the CNS was issued.

Revised Generic Cleanup Standards

The VAP rule change also proposes a major overhaul to the methodology for calculating VAP generic cleanup standards.  Ohio EPA is moving toward use of U.S. EPA Regional Screening Levels.  

In some cases the standards get more stringent and in other cases more lax.  At the Brownfield Conference, Ohio EPA stated the only dramatic change is to the cleanup value for trichloroethylene (TCE).  At the conference, the Ohio EPA stated it notified all sites it was aware were currently performing a VAP cleanup where TCE was a constituent of concern of the proposed change.

In order to have the current generic cleanup standards apply to your VAP cleanup, then the volunteer must submit a NFA to the Agency before the rules are finalized.

Urban Setting Designations- Expanded Use 

Urban Setting Designations (USDs) are an important tool under the VAP.  Cleanup of contaminated groundwater can often be the most costly portion of the cleanup.  Ohio EPA recognized that there may be little benefit to requiring cleanup of contaminated groundwater in urban areas where the population was served by public drinking water systems.  

Requiring cleanup of groundwater in those situations may result in avoidance of brownfield properties.  With a USD designation, a volunteer can avoid a costly cleanup of contaminated groundwater.

Under the proposed VAP rule changes, Ohio EPA is proposing to expand the eligibility of areas for USDs.  For example, a village that meets certain geographic requirements can request a USD.

Off-Property Cleanup Requirements

An area of uncertainty under the VAP program had been what cleanup requirements apply to contamination that may have already left the volunteer's property.  Under the proposed rule, Ohio EPA states it is clarifying the obligations to address off-property releases.

Ohio EPA states a volunteer is required, even under current VAP rules, to cleanup off-property releases of contamination that exceed VAP standards.  Under the proposed rule change, this requirement is being made explicit.  This may be viewed by some as a major program change.

The proposal does include new provisions to provide some flexibility in addressing off-property releases.  A volunteer can attempt to make a demonstration to Ohio EPA that it "used best efforts" to address the release, but something made it impossible or impractical.  Examples:

If a neighboring property owner uses a drinking water well and refuses access to his property to address the contamination, this may be grounds for an exemption from Ohio EPA.

 

 

A release from the property contaminates sediment in adjacent river that exceeds applicable standards.  The volunteer would need to address the sediment unless it can demonstrate it is contaminated from multiple sources.

 

 

However, it is important to note, if an exemption to address a off-property pathway is granted, the CNS (legal release) will not extend to that pathway (i.e. the volunteer could be required to clean it up in the future if circumstances change).

When a Property Must Meet VAP Standards

The proposed rule changes intend to clarify that a volunteer only has to construct the remedy prior to issuance of the CNS, so long as he/she demonstrates the property will meet VAP standards within five years (or some other time agreed to by Ohio EPA).  This allows flexibility where remedy involves ongoing treatment. 

Post CNS Changes to Remedy

The proposal also establishes a process for modification of a remedy post-CNS.  

  • For example, if institutional controls (ex: fence or protective barrier) is used to demonstrate the property meets standards, the Volunteer can remove those controls without the property losing its CNS status during implementation of the new remedy.

Sufficient Evidence- VAP Eligibility Post-Enforcement

A volunteer is eligible for the VAP until it receives notice of enforcement from Ohio EPA.  If a volunteer had initiated a VAP cleanup prior to receiving notice of enforcement, the volunteer can continue if it makes a so-called "sufficient evidence demonstration."  

The proposed rule changes clarify what must be demonstrated and how quickly the cleanup must be completed in order to avoid enforcement.  Under the rules, the volunteer must demonstrate initially that they

  • Completed a Phase I assessment;
  • Retained a VAP certified professional;
  • Developed a schedule of activities for completing the VAP

If the volunteer is deemed to have satisfied sufficient evidence, it must adhere to the schedule and complete the VAP cleanup within three years under the proposed changes.

Schedule

Ohio EPA indicated the final rules would be filed with JCARR on April 15th.  JCARR jurisdiction would end on June 16th, with the final effective date being no sooner than July 1st.  

However, this assumes that significant objections are not raised during the JCARR process.  If such objections are made, the Agency could be forced to pull the rules resulting in delays. 

EPA and Corps Release Proposed Rule Defining "Waters of the U.S."

When does placing fill in a wetland or disturbing a stream for construction require a federal permit? Seems like this should evoke a pretty straightforward answer.  However, for more than a decade the extent of federal permitting regulations has been unclear.  Now EPA and the Army Corps of Engineers (ACOE) are attempting, once again, to try and provide a clear answer.

Background on Supreme Court Clean Water Act Decisions

Federal regulations clearly define "waters of the United States" in 40 CFR 122.2 to include "navigable waters" (i.e. those waterways used for commerce) as well as interstate waters.  What has not been clear is the scope of "other waters" that fall within federal jurisdiction.

The extent of federal jurisdiction over streams and wetlands has been unclear ever since the Supreme Court  issued its decisions in Solid Waste Authority of Northern Cook County v. Army Corps of Engineers, 531 U.S. 159 (2001) and Rapanos v. United States, 547 U.S. 715 (2006).  Since Rapanos, Justice Kennedy’s “significant nexus” test has been used to determine jurisdiction for streams and wetlands that fall into the "other water" regulatory classification.  Under the test, a waterway is evaluated to determine whether it impacts the chemical, physical, and the biological integrity of a navigable water. If it does impact a navigable water in that manner, then it falls under federal jurisdiction. 

Since the Rapanos decision, both the ACOE and EPA have struggled to provide clear guidance as to which waterways meet the "significant nexus" test.  Far too frequently, the determination has been left to case-by-case determinations that are litigated.  Making matters worse, different federal courts have reach different conclusions when applying the “significant nexus” test. 

The ACOE and EPA have attempted to clarify through guidance federal jurisdictional waters, but those guidance documents have been vacated by the Courts (see prior post).  The courts made clear a formal rule was necessary for EPA and ACOE's scientific interpretations to have legal force.

On March 25, 2014, EPA and the Army Corps of Engineers jointly released their proposed rule defining the terms “waters of the United States” under the Clean Water Act.  Under the proposal, the federal agencies attempt to move away from the case-by-case application of the “significant nexus” test by simply defining certain waters as under federal jurisdiction.

 Proposal Maintains Jurisdiction over Navigable Waters

Under the proposed rule, the following waters are jurisdictional by rule, with no further analysis needed:

  • Navigable waters
  • Territorial seas
  • Interstate waters
  • Tributaries of navigable or interstate waters
  • Adjacent waters and wetlands

The EPA and ACOE state they are not expanding the definition of these categories in the proposed rule.  Rather, these categories represent those waterways that have been consistently recognized as subject to federal jurisdiction in prior rule making.

Expansive Proposed Definition of Tributary

The rule proposal does contain an entirely new definition of "tributary," which under the proposed rule, would be classified as jurisdictional waters with no further analysis.  If the rule were finalized, it would eliminate most case-by-case decision making on federal jurisdiction.  Under the proposal, a “tributary” is any waterway that meets the following characteristics:

·       Can have perennial, intermittent or ephemeral flow

·       Has a defined bed, bank and ordinary high water mark (a term defined under existing regulations)

·       Contributes flow, either directly or through another water, to as jurisdictional water

·       Or, is part of a network that drains to a jurisdictional water

The portion of the definition which states any waterway that contributes flow “directly or through another water” to a jurisdictional water, is very expansive.  It is these waterways with more tenuous connections to "navigable rivers" that have been the subject of litigation.  The proposed rule would eliminate any doubt for the vast majority of such streams and wetlands-  they would be under federal jurisdiction.  

The tributary definition includes wetlands, lakes, ponds that contribute flow to a navigable or interstate water.  It also includes ditches, except in upland areas that don’t contribute flow to a jurisdictional water. 

The rule proposal states the connectivity demonstration can be made using aerial photos and/or USGS maps or other evidence.  However, only the connection must be demonstrated.  There does not need to be any individualized demonstration that the waterway in question impacts the chemical, physical, and the biological integrity of a navigable water. EPA argues its review of the science demonstrates the vast majority of tributaries have such impacts.

While it difficult to come up with a stream or wetland that would likely not fit the definition of tributary, the rule still proposes to a catchall provision which states jurisdiction may still be asserted over any waterway on a case-by-case basis.  The catchall provides EPA and ACOE for regulate streams and wetlands that may not meet the expansive definition of tributary.

EPA Argues Proposal Rule Supported by Science

EPA states that the proposal to expansively define tributary to automatically include most waterways without a case-by-case demonstration is supported by scientific literature.  EPA conducted a review of published peer-reviewed scientific literature- “Connectivity and Effects of Streams and Wetlands on Downstream Waters:  A Review and Synthesis of Scientific Evidence.”   In it's review EPA concludes most waterways are interconnected and can impact water quality of larger streams and rivers.

In the proposed rule, EPA argues that its expansive definition of tributary is supported not only by science but by case law as well.  EPA discusses the various cases that have tried to address the "significant nexus" test.

Public Comment Period

A 90-day public comment period will begin once the proposal is published in the Federal Register.  The EPA states is seeks comments to its proposal as well as other ways to define which waters should be considered jurisdictional.  However, the proposal makes very clear that EPA believes its proposal is on solid ground.  

 Creative Commons photo by putneypics via Flickr

As a Buyer Can I or Should I Rely on an Old Phase I?

In real estate transactions it is not uncommon for the seller to provide the buyer a copy of prior a Phase I environmental assessment.  The seller either ordered a Phase I in anticipation of the transaction or one may exist from a prior transaction involving the same property.  Should the buyer be satisfied with this prior Phase I?

Purpose of the Phase I from the Seller's Perspective

In terms of records and site review, a Phase I environmental assessment essentially involves the following steps:

  • A review of environmental databases- records of known or potentially contaminated sites in the vicinity of the property, landfills, and other disposal sites, and underground storage tank records (for both leaking and registered USTs) 
  • A review of local regulatory files-  these could include the state EPA, local fire department or health department.
  • Aerial photos and sanborn maps- to review the history of the use of the property
  • Interviews- with a site contact or  someone with knowledge of the property
  • Site walkover by the consultant-  the consultant is looking for signs of potential releases of contamination (ex: distressed vegetation or oil stains)
  • No sampling- A phase I will not involve any actual soil or groundwater sampling even if issues are identified

If the seller has a Phase I, they may have ordered a Phase I to determine whether there are any environmental concerns that can be quickly ascertained.  However, keep in mind the seller and buyer's goals are not exactly in line with regard to environmental due diligence.

First, seller is not concerned with establishing any liability defenses because they aren't entitled to them if they perform a Phase I after already owning the property.  Second, if the Phase I identifies a potential issue, many sellers will stop their inquiry- they aren't interested in taking on the costs of addressing any issues that may be identified.

Buyer's Perspective- Establish the Bona Fide Purchaser Defense

CERCLA liability applies to "owners" and "operators."  Therefore, as the buyer, once you take ownership of the property you can be liable for any historical contamination that may exist, even if you had nothing to do with that contamination.  

In 2002, Congress passed the Small Business Liability Relief and Brownfields Revitalization Act (known as the "Brownfields Act").  The Act amended CERCLA to provide greater incentives for buyers to purchases and re-utilize brownfield properties.  The amendments established the Bona Fide Purchaser Defense (BFPD).  

Under the BFPD, a Buyer can establish a defense to liability under CERCLA if it performs due diligence prior to purchase in accordance with EPA standards.  A property does not need to be abandoned or vacant to be eligible for the BFPD, facilities still operating can qualify.

This post is not meant to be an exhaustive discussion of the requirements for establishing the BFPD. However, three key points to keep in mind from the buyers perspective with regard to prior Phase I reports:

  1. The Phase I must be performed within 180 days of purchase.  If a Phase I was performed within the last year, then a Phase I update can be performed. A Phase I more than one year old cannot be used to establish the BFPD;
  2. The buyer must be able to "rely" on the Phase I.  This means if the buyer wants to utilize the Seller's Phase I it must obtain either be identified in the Phase I update as a party that can rely on the Phase I or it must obtain a reliance letter from the consultant who performed the Phase I; and
  3. The buyer must make sure that the Phase I meets all the required elements set forth under EPA recognized standard for Phase Is- ASTM 1527-13 and EPA's "All Appropriate Inquiries" Rule (AAI).  (See discussion in prior post on the new ASTM standard).

Item 3 is of particular importance to the buyer.  I have reviewed plenty of Phase I reports that did not contain the required elements of the ASTM or AAI rule.  An inadequate Phase I will not allow the buyer to establish the BFPD.  

Therefore, it is of critical importance the buyer review any prior Phase I reports to ensure they are up-to-date, can be relied on and meet the required elements.  

Buyer May Want a Closer Look

If the seller's Phase I is "clean"- does not identified any "Recognized Environmental Conditions" (i.e. no indications of a release of contamination), then seller will be reluctant to allow any greater scrutiny of the property.  However, buyer should make sure the Phase I was adequate and no red flags are contained in the report.  

If the Phase I report does identify RECs, did the seller perform any additional investigation?  While AAI technically does not require sampling, it may be very difficult, if not impossible, to establish the BFPD without sampling to determine if a release did occur.  

If contamination is identified, then the buyer still can establish the BFPD if it takes "reasonable steps" to stop releases and prevent exposure to that contamination.  Under the BFPD, the buyer is not expected to perform the same level of cleanup as a liable party under CERCLA.

Beyond liability defenses, as the potential owner of the property, it is generally prudent to avoid taking on major headaches.  Therefore, buyers want to make sure sufficient due diligence was performed.  It is definitely in the buyer's interest to ensure they have a thorough understanding of the condition of the property.

For example, the BFPD is only a liability defense to CERCLA.  If other environmental regulatory obligations exist, such as underground storage tanks, the BFPD will not provide liability protection to those requirements.

Sellers may resist any questioning of the adequacy of a prior Phase I.  If the prior Phase I identified issues, seller may also be reluctant to allow further investigation.  However, as the buyer, you face liability exposure under CERCLA and potentially other environmental laws once you take ownership.

In conclusion, if a prior Phase I report exists, it it very important the buyer thoroughly review the report and take the necessary steps to protect themselves.  

Hazardous Waste (RCRA) and Retailers

When most people think of businesses that handle hazardous waste, they think of manufacturing and other industrial companies.  The classic image is the storage of 55 gallon drums marked with placards indicating the contents are hazardous. 

In the last two years and unlikely sector has found themselves the focus hazardous waste enforcement and regulatory development- retails stores.  National awareness occurred in 2013 when Walmart announced a settlement with EPA to resolve violations of the Resource Conservation and Recovery Act (RCRA), the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), and the Clean Water Act (CWA) .  The violations were related to the handling of returned, unsold, and off-specification products. Walmart agreed to pay $7.628 million in civil penalties and pled guilty and agreed to pay $81.6 million in three federal criminal cases. Walmart entered into a Consent Agreement and Final Order (CAFO) with EPA, under which Walmart agreed to implement various measures to ensure future compliance. 

While the Walmart settlement was the largest, EPA and State EPA's have been very active in taking enforcement against retailers.  Actions include:

  • Walgreen Co., $16.6 Million (2012)
  • Costco Warehouse, $3.6 Million (2012);
  • CVS Pharmacy, $800,000 (CT, 2013) and $13.75 Million (CA, 2012
    settlement);
  • Target Corp., $22.5 Million (2011);
  • Home Depot, $425,000 (2006) and $10 Million (2007).

When Does RCRA Become an Issue for Retailers?

Products are not regulated as a hazardous waste.  However, if a product is returned by a customer or the store takes the product off the shelf due to damage or for some other reason, the product can become a hazardous waste if it meets certain characteristics.

At issue for retailers are paints, aerosol cans, bleach, polishes, and other chemical products that could be considered reactive, ignitable, corrosive or toxic.  When those products are returned by customers or if they are removed from the store, the retailer must evaluate whether the product has become a hazardous waste and should be managed as such.  

Waste can be generated at the retail store level through customer returns, household hazardous waste events, product recalls, damaged product containers or packaging, off specification product, unauthorized dumping, customer spills, and change out of inventory by the store. 

Large retailers also use reverse logistics systems to consolidate products that may be returned or removed from retail stores.   These products are sent to consolidation centers where decisions can be made regarding whether the product can still be sold, returned to the vendor, donated, recycled or discarded.  

Is a removed/returned product a "waste" when it leaves the retail store or when the decision is made it is to be discarded at the consolidation center?  That is one of many critical open issues facing retailers.

If a product is a hazardous waste, then it must be stored, managed, transported and disposed properly.  In addition, RCRA's "cradle to grave" regulatory scheme requires maintenance of required paperwork to verify any hazardous waste was managed properly.

EPA Collects Information Regarding Hazardous Waste Requirements for Retailers

On February 14, 2014, EPA released a Notice of Data Availability (NODA) in order to "collect information towards improving hazardous waste requirements for the retail sector."  In the NODA EPA sums up the challenge facing retailers- "Retailers are required to make numerous hazardous waste determinations at thousands of sites, generally by store employees with limited experience with the RCRA hazardous waste regulations."

Some national retailers (Walmart and Home Depot) already submitted comments to EPA.  Some of the issues/concerns raised by these retailers include:

  1.  Waste characterization at the retail store level by employees with little training or understanding of the regulations;
  2. Generation of waste at the store level that can force stores to fluctuate between Conditionally Exempts Small Quantity Generator to Large Quantity Generator status under RCRA (different regulations apply depending on the store's classification);
  3. The lack of applicability of the Household Hazardous Waste Exemption which allows customers to dispose of the same products in the trash as EPA requires retailers to manage as a hazardous waste;
  4. Argue for the application of Universal Waste classification which would make it much easier for retailers to manage products; and
  5. Application of RCRA regulations to central processing centers utilized by retailers;
  6. Regulation of empty prescription bottles;
  7. Ambiguous regulations of electronic waste.

Retailers identify legitimate issues with application of RCRA to their stores.  In reality, RCRA was designed to regulate generate hazardous waste from industrial operations, not consumer stores.  

How EPA decides to move forward to develop sensible regulations will be very interesting to watch. However, in the meantime, retail stores must be aware there is not "timeout" while EPA figures this out.  No better evidences exists than the multi-million dollar enforcement cases against large retailers.

(Photo: courtesy Flickr Catawba County)

Supreme Court Hears Arguments Regarding "Absurd Results" and Permitting for Greenhouse Gases

On February 24th, the Supreme Court heard oral arguments in Utility Air Regulatory Group v. EPA- the case which challenges EPA's attempt to phase in permitting requirements for sources of greenhouse gases (GHGs).  In the end, the case may be much to do about nothing...except another example of how congressional gridlock prevents logical resolutions to complex issues.

 

 

Challenge to EPA's Tailoring Rule

In Massachusetts v. EPA, the Supreme Court upheld the ability of EPA to regulate GHGs from motor vehicles (the so called "Tailpipe Rule").  In that decision the Court determined that the term "any air pollutant" included GHGs so long as EPA determined GHGs were a threat to public health and environment.

EPA determined GHGs were a threat to public health and the environment in its "Endangerment Finding."  The Supreme Court declined to hear the case challenging EPA's finding. Following EPA's determination, GHGs officially became a regulated air pollutant under the Clean Air Act.

Following EPA's Endangerment Finding, EPA concluded that complex federal permitting requirements (PSD and Title V) would also be triggered for sources of GHG because the term "any air pollutant" was used in that portion of the Clean Air Act as well.  Pursuant to that section of the Act, any facility that emits more the 100/250 tons per year of a pollutant regulated under the Act must go through EPA's New Source Review (NSR) program. As part of NSR, new sources or existing sources that are modified must demonstrate they have installed Best Available Control Technology (BACT) to reduce emissions of each regulated air permit.

Because GHGs are emitted in much greater quantities than typical Clean Air Act pollutants, EPA was concerned that application of the 100/250 ton per year threshold to GHGs would trigger thousands of permits. EPA indicated the Agency and States did not have the capacity to process that number of permits.

To address the situation, EPA promulgated the Tailoring Rule to temporarily raise the permitting thresholds. Under the first stage of the Tailoring Rule, new facilities that emit 100,000 tons per year of carbon dioxide-equivalent and existing facilities that increase their emissions by 75,000 tons per year of carbon dioxide-equivalent will trigger NSR,

Petitioners challenged EPA's Tailoring Rule by arguing EPA did not have the authority to simply re-write the statute.  They also pointed to language in the PSD portion of the Clean Air Act which suggests PSD was meant to apply to pollutants with local impacts, not global impacts.  Industry challengers were concerned that allowing 90 different state and local permitting authorities to decide what constituted BACT for GHGs would be chaos.

Justices Highlight the "Absurdity" of EPA's Proposal

EPA justified its Tailoring Rule based on the legal theory that it would temporarily adjust the 250/100 trigger thresholds because applying those thresholds immediately to GHGs would lead to "absurd results."  

Justice Kagan noted that the purpose of the 250/100 trigger thresholds were to differentiate between large and small sources.  Justices Breyer and Alito followed that point by noting EPA's position was illogical in that EPA said the trigger thresholds led to absurd results, yet EPA would eventually work toward utilizing those thresholds for GHGs.

Clearly, the Justices were highlighting a core issue with EPA's Tailoring Rule.  Perhaps it would have been better to simply pick a more logical threshold for GHGs that would have differentiated between large and small sources of GHGs.  

EPA's attorney basically acknowledged that may have been a better approach, but EPA was concerned simply coming up with an entirely new threshold went beyond its authority.  EPA argued, rather than totally eliminating the 250/100 thresholds for GHGs, EPA would re-interpret other policy positions to try capture only larger sources.  For example, EPA could look at a source's actual emissions versus their potential-to-emit (assumed operation 24/7) when determining if the 250/100 ton threshold was exceeded for GHGs.

EPA's argument seems pretty weak.  It is not simply the administrative burden of regulating thousands and thousands of sources of GHGs.  Rather, it is the fact such approach clearly goes against the intent of the Clean Air Act PSD regulations to regulate only large sources.  The Court seemed troubled by EPA's attempt to temporarily raise permitting thresholds.

Challenge to EPA's Tailoring Rule Becomes "Much to do About Nothing"

While the Court seemed troubled by EPA's approach, even if it vacates the Tailoring Rule, the Court's decision will likely have very little impact on EPA's overall effort to regulate GHGs.

Challengers conceded in their briefs that EPA has the authority to regulate GHGs from sources of other pollutants subject to National Ambient Air Quality Standards (NAAQS) for which geographic area is in attainment (referred to as "anyway sources").  As noted by Chief Justice Roberts, this construction would allow EPA to regulate 83% of GHG stationary source emissions versus 86% under EPA's more expansive reading.

When Justices pressed why they should care about a fight over 3% of the emissions, EPA's attorney argued such an interpretation would be inconsistent with EPA's prior interpretations. However, Justice Breyer noted that such an interpretation "does less violence" to the Clean Air Act than EPA's proposed ratcheting up of the 250/100 trigger thresholds.  

Based on questioning from the Justices, the most likely outcome of the case is that only 3% of emissions will be impacted either way.  

Supreme Court Argument Highlights the Problem with an Ineffectual Congress

Virtually everyone, including EPA, concedes the 250/100 tons thresholds don't make sense when applied to GHGs.  EPA has previously admitted that the Clean Air Act, as currently constructed, is ill suited for regulation of GHGs.  However, with Congress unable to compromise, the country is left with the false choice of doing nothing to combat climate change or utilize an Act that was last amended nearly 25 years ago.

The stakes on climate change are simply too high to be left with this result.  The "do nothing" approach on climate change is a non-starter.  However, the uncertainty and "absurdity" that results from using the current Clean Air Act construct to regulate GHGs has unreasonable implications for industry.  

Climate change regulation has greater implications for the county than, perhaps, even the original issues that shaped the Clean Air Act.  Yet, the inability of Congress to reach middle ground will result in the institution of imperfect and impractical climate change regulations. 

[Photo courtesy www.TheEnvironmentalBlog.org]

Difference between "Classic" VAP and VAP MOA

In Ohio, the primary brownfield cleanup program is known as the Voluntary Action Program (VAP).  Volunteers can cleanup their site to commercial/industrial or residential standards.  Upon completing the cleanup the volunteer can receive a legal release from the State of Ohio (called a "Covenant-Not-to-Sue" or CNS).

The CNS under the VAP does not include a release of liability from U.S. EPA.  In order to attempt to provide an option for volunteers who desired some protection from U.S. EPA enforcement, Ohio created the VAP Memorandum of Agreement (MOA) track.

I have had a few clients in the last couple months ask about the differences between the "Classic VAP" and the VAP MOA.  The main reason they ask is because they are interested in the heightened liability protection that is available under the VAP MOA process.  However, is the extra cost and longer time frames worth it?

"Classic" VAP

Under "Classic" VAP, the volunteer hires an environmental consultant who is recognized by Ohio EPA as a "certified professional" ("CP") under the VAP.  The CP performs the investigatory and cleanup work at the site to VAP regulatory standards.  Once the cleanup is complete, the CP prepares a "No Further Action Letter" (NFA) certifying that the property meets VAP standards.  

The volunteer then decides if they want the CP to submit the NFA to Ohio EPA for review.  If the NFA is submitted to Ohio EPA and the Agency concurs the property meets VAP regulatory standards, then the Agency issues a "Covenant Not to Sue" (CNS).  This is a formal legal release of liability from Ohio EPA.

As outlined above, the VAP process is a private cleanup.  There is no public involvement and no records are public until they are submitted to Ohio EPA for review.  

VAP MOA Track

MOA means Memorandum of Agreement.  The agreement is between U.S. EPA and Ohio EPA. (A copy is available here)  Under the agreement if a volunteer agrees to follow additional steps than necessary under the Classic VAP, it can receive "comfort" from the U.S. EPA that it won't pursue additional cleanup.  Those steps include:

  1. Notice of entry into the VAP MOA program;
  2. Publish notice in the local newspaper that the volunteer has entered the program;
  3. Create a document depository in the local library available to the public;
  4. Volunteer must publish the proposed work plan and allow for public comments (30 day comment period);
  5. Host a public meeting to discuss the work plan;
  6. All documents associated with the VAP cleanup must be placed into the library (includes the Phase I, Phase II, Risk Assessment Report, Remediation Work Plan, and the NFA letter); and
  7. Public can request additional public hearing during the cleanup process.

If a volunteer meets the various requirements outlined above, then U.S. EPA provides the following "comfort"

For sites or facilities that have completed the voluntary action in compliance with the MOA Track procedures...U.S. EPA Region 5 does not plan or anticipate taking action under CERCLA or RCRA while the facility remains in compliance with the MOA Track VAP requirements, except as provided in Section IV.B below.

The highlighted language makes clear that completion of the VAP MOA does not provide the volunteer a legal release from U.S. EPA.  Rather, the volunteer gets the assurance that EPA "does not plan or anticipate taking action."  Nothing prohibits such action.

In fact, the highlighted language at the end of the paragraph provides several instances when EPA can take action, including:

  • Newly discovered information after the CNS is issued indicates additional cleanup is needed;
  • Failure to comply with applicable VAP cleanup plans and Ohio EPA fails to take action to correct the situation;
  • The site presents an imminent and substantial endangerment to public health or welfare or the environment; and
  • Ohio EPA requests EPA help because the volunteer isn't make sufficient progress to complete the VAP MOA track

How Many Sites Have Gone Through the Classic VAP versus VAP MOA?

Currently, according to Ohio EPA tracking, 556 sites have submitted an NFA for review.  Not all of those sites have received a CNS.  29 NFAs were withdrawn before receiving a CNS.  

Only a total of 59 sites are identified as having entered the VAP MOA process.  Of those 59 sites, 22 sites actually submitted an NFA thus completing the VAP MOA process.  (Link to Ohio EPA list of VAP MOA sites)

What these numbers tell you is that very few volunteers have decided to spend the extra time and money to complete the VAP MOA process.  Some who even started, later left the MOA process.

Biggest Issue is Time

The biggest issue for many volunteers contemplating the VAP MOA process is the extra time involved.  Each plan is available for public comment.  A public hearing is required as well.  The extra time to complete the added upfront Ohio EPA review and public involvement can add many months on to a project. 

A review of the MOA track list shows that most projects took more than one year to complete once they formally entered the program.  Some took five or six years to complete.  It is unlikely Ohio EPA would allow a project to sit in process that long any more, but the track record clearly demonstrates the added steps will add significant time to the cleanup.

Risk Tolerance

As with many things environmental, whether to go Classic VAP or VAP MOA Track really depends upon your client's risk tolerance.  For some clients, the added comfort from U.S. EPA (even though its not a legal release) is enough.

[Photo courtesy Engineering at Cambridge]

As Economy Improves is Sustainability Back in Vogue?

Prior to 2008 it seemed every company was talking about sustainability.  It was unprecedented the number of corporations that were putting out sustainability reports or hiring senior executives responsible for corporate "green" strategy.  That changed with the financial crisis.

In a few short months the "green" movement was replaced with concerns about jobs and saving the financial system.  This is is a quote from a blog post I did back in 2008 shortly after President Obama was elected to his first term.

Remember a few months back when oil peaked around $140 a barrel. Of course you do...But do you also remember the momentum behind the green movement due to the reality of limited resources and escalating energy prices. Everything looked possible- a shift to renewable energy, energy conversation, higher gas mileage vehicles, and climate change legislation.

Now, only a few months later and oil is around $60-70 a barrel (I just filled up my gas tank for $1.90 per gallon) We saw an economic meltdown the likes that has not been seen since the Great Depression.

While the economy floundered, so did the green movement.  Environmental issues were an after thought in the two presidential elections.  President Obama slowed down his aggressive push toward climate change regulations.  

Now it appears the economy is on firm enough footing that the sustainability movement is getting back its mojo.   For example, take the recent New York Times Article discussing First Energy's agreement with activist shareholders that want lower carbon emissions from the utility.

As part of an agreement reached with shareholders, First Energy agreed to study and report on what it could do to help meet President Obama's goal of reducing carbon emissions by 80 percent by 2050.  

The Times notes that the agreement "comes as investors are increasingly pressuring corporations into action on climate change."  In the 2013 proxy season, "shareholder submissions grew more than 6 percent compared with the year before, with environmental and social proposals representing the largest category, at just under 40 percent."

As of today, the price of oil crossed back over the $100 per barrel threshold. As the economy improves commodity prices will again rise.  Higher prices for raw materials and energy pushes companies to think more aggressively about conserving resources.

As we head into 2014, my bet is you will start hearing that "sustainability" buzz word more and more.  

Is U.S. EPA Finally Moving Toward a Stricter Ozone Standard

The Obama Administrative continues to be heavily criticized by industry for its aggressive development of greenhouse gas regulations.  In contrast to the dizzying pace of new greenhouse gas regulations stands finalization of a new ozone standard...something the President promised to do after being elected to his first term. 

Under the Clean Air Act, EPA is required to review the ozone standard every five years. In 2008, the Bush Administration set the new ozone limit at 75 parts per billion (ppb). That was tighter than the existing regulations, but considerably weaker than the 60 to 70 ppb recommended by the Clean Air Science Advisory Committee (CASAC- a science advisory panel which advises EPA in settings National Ambient Air Quality Standards).

Litigation ensued over the Bush standard. However, a cease fire was called when the Obama Administration took office and called the 75 ppb indefensible. The EPA promised to revisit the standard and set it somewhere between the 60 to 70 ppb recommended by CASAC.

After two prior deadlines passed without a new standard, the Administration identified August of 2012 as the final date.  That date came and the Administration again said they would delay final standards until 2013.  Yet nothing happened last year.  Now, it appears the Administration may be making progress toward finalizing the standard.

On February 3rd, EPA release two reports-  its draft risk and exposure assessment and the Second External Review Policy Assessment for the New Ozone Standard.  Both of these reports confirm what was known five years ago-  the recommendation is to lower the standard to somewhere between 60 to 70 ppb.  

Clearly the Administration still has cold feet about finalizing a revised standard.  In fact, we have now gone more than five years since a review of the old standard.  

This is all good news to State's like Ohio with a heavy manufacturing base, larger populations and fossil fuel reliant power base.  As discussed in my last post on this topic, the longer the delay the more time existing federal regulations have to take effect to reduce ozone precursors.  In reality, the States have very little ability to significantly reduce ozone pollution through state specific regulation.

The lengthy delay may mean that ozone levels will be reduced down to where a 70 ppb standard would be realistically attainable, something that seemed impossible even five years ago. 

TSCA Penalty Serves as Warning Regarding Non Compliance with Disclosure Requirements

 In a very significant case, the Chief Administrative Law Judge (ALJ) for U.S. EPA imposed a $2.5 million dollar penalty against a manufacturer, Elementis Chromium, Inc. ("Elementis") for failing to submit a health study to EPA pursuant to the requirements of TSCA.  The EPA imposed the large penalty despite the fact,

  • Many of the findings in the study were disclosed to EPA through other studies; and
  • The violation occurred more than five years ago- past the applicable statute of limitations period

Background

Elementis was part of a business coalition who undertook an epidemiological study of chromium-based products.  The study was performed, in part, as an attempt to potentially provide support for modification of the permissible exposure limit (PEL) for hexavalent chromium adopted by OSHA. 

The study was completed in 2002.  Elementis didn't provide the study to U.S. EPA until six years later, in 2008, in response to a subpoena.  

EPA filed a complaint against Elementis for failing to disclose the study in accordance with the requirement set forth in TSCA Section 8(e) which provides:

Any person who manufacturers, processes, or distributes in commerce a chemical substance or mixture and who obtains information which reasonably support the conclusion that such substance or mixture presents a substantial risk of injury to health or the environment shall immediately inform the Administrator of such information unless such person has actual knowledge that the Administrator has been adequately informed of such information.

Elementis argued the EPA was "adequately informed" regarding the impacts of chromium and the study did not need to be disclosed as a result.  Also, the company asserted the failure to disclose occurred more than five years ago, past the applicable statute of limitation period. 

Statute of Limitations

EPA admitted that the five-year statute of limitations is generally applicable to administrative penalty actions brought under TSCA.  However, the EPA's ALJ ruled that violations of TSCA Section 8(e) are continuing in nature.  Therefore, so long as the company failed to disclose, the statute of limitations did not begin to run.

New Information

The company also argued there was no violation of Section 8(e) because EPA was previously aware of the general conclusions of the study.  The ALJ rejected the Company's argument and ruled it was required to disclose the report because there were significant distinctions between the study at issue and previous studies.  

The ninety page decision includes a highly detailed analysis of the ALJ determination the study had distinguishing characteristics which triggered the mandatory duty to disclose under TSCA. Many of the differences noted by the ALJ were with regard to the test methodologies employed, not necessarily health impacts.  

The opinion highlights the risks involved in the TSCA duty to disclose under 8(e).  The company incurred a substantial penalty despite:

  • Information and conclusions in the study had similarities to prior studies of chromium-based products;
  • The violation, failure to disclose, occurred more than five years ago which was past the normal statute of limitations period.

It is worth noting that the ALJ felt the Company's failure to report, was so egregious in this instance, that it increased the penalty by 10%.  The ALJ felt the Company made critical comments in regulatory proceedings regarding data gaps involving chromium health impacts while being aware of the study, which it helped complete, and did not disclose to regulators.

 

Ohio EPA Director Scott Nally Resigns- Butler Named as Interim Director

On January 7th, Scott Nally resigned as Director of Ohio EPA after a three year stint.  Local media coverage of his resignations raised questions regarding the abrupt and surprise announcement.  Speculation included the fact that it was tied to the Nally's firing of long-time Division of Surface Water Chief George Elmaraghy earlier this year.  This from the Columbus Dispatch:

“We can’t understand what Director Nally did or didn’t do in complete lock step with this administration. Maybe he is voluntarily pursuing other interests, but it’s suspicious he didn’t personally make the announcement.”

Kasich spokesman Rob Nichols said Nally’s resignation was not connected to the resignation last year of George Elmaraghy, who was chief of the EPA division that oversees the state’s efforts to protect streams, lakes and wetlands from pollution. Elmaraghy said he was asked to step down by Nally and Kasich because of clashes with the coal industry about water-pollution permits.

With Director Nally's resignation, Craig Butler, who had served in Governor Kasich's office, was named as interim Director.  With the Governor's election this November, it it unlikely a replacement will be named until after the election.  This means Mr. Butler will more than likely serve as Director until after the election.

Butler brings a wealth of experience to the position.  He served as an industrial liaison in the Director's Office of Ohio EPA under Governor's Voinovich and Taft.  He also served as District Chief of Central District Office and Southeast District Office.  More recently, he served in Governor Kasich's Office as the Executive Assistant to various agencies, including Ohio EPA.

His background and experience will be a major asset to him as he serves as Director.  He has seen the practical implications of EPA regulations on businesses, dealt with local issues as a District Chief as well as the political side to the Agency (Both in the Director's Office and Governor's Office).