Ohio Environmental Law Blog : Ohio Environmental Lawyer & Attorney : Joseph Koncelik : Frantz Ward Law Firm : Environmental Regulation, Land Use, Compliance : Cleveland, Ohio

There are a myriad of federal statutes that require your company to report a spill to any of the following:

• National Response Center
• State Emergency Response Center (SERC)
• Local Emergency Planning Committee (LEPC)
• Local Fire Department

Failure to report a spill can lead to an enforcement action as well as civil penalties.  Also, failure to respond appropriately following a spill can lead to serious ramifications for your company in terms of exposure to greater clean up costs, property damages, or environmental harm. 

Due to the liability exposure associated with managing and reporting spills appropriately, its wise for all corporations to have prepared an internal corporate policy for spill response.  The policy would not only cover when you have a legal obligation to report a spill to regulators, but also how to communicate about a spill internally within the company.

Depending on the facts and circumstances surrounding the spill event, you are not always under a legal obligation to report a spill to the authorities.  Its wise to know your regulatory obligations before making the decision to report.  Otherwise, you may be inviting teams of regulators to your facility unnecessarily. (Click here for U.S. EPA's Website on Spill Reporting)

The facts of each event are different.  Therefore, each must be analyzed independently to determine your regulatory obligations.  However, its wise to get familiar with the triggers for mandatory reporting.

Attached is a series of power point slides which contains information regarding the most commonly applied federal regulations that may trigger mandatory reporting to federal or state regulators.  The spreadsheet shows the event, regulation, trigger level and reporting requirement. 

These charts were based upon a more limited spreadsheet prepared by Region VII of U.S. EPA called the Fact Sheet on Emergency Release Reporting Requirements.  They are meant for reference only and cannot substitute for analysis of each regulation and the facts surrounding your particular event.  However, I hope they are useful to you in getting familiar with the mandatory reporting obligations that exist.

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On March 21, 2011, U.S. EPA issued final air toxic standards for industrial and commercial boilers.  The rules regulated emissions of hazardous air pollutants (HAP) from industrial, commercial, and institutional boilers and process heaters located at major sources of HAP emissions (the "Major Source Boiler MACT").  The EPA also issued final rules regulating emissions from commercial and industrial solid waste incineration units (the "CISWI Rule"). 

While the rules were issued, EPA also announced that it would reconsider the rules to address certain technical issues.  Some of those technical issuesunder EPA review include:

• Revising major subcategories in the major source rule;
• Establishing work practice standards for limited use major source boilers;
• Standards for biomass and oil-fired source boilers based on available control technology; and
• Providing an affirmative defense for malfunction events.

The effective date for each of the new rules was supposed to be May 20th.  However, the industry has provided significant input that the standards are not realistic and will be too costly. A number of business associations filed motions for reconsideration and requested a stay of the effective date while EPA completed its reconsideration of the rules.

Yesterday, EPA announced it  has issued a temporary stay of their effectiveness and will seek comments through July 15, 2011. 

Thus, the long and winding road of this rule package just got a little longer.  The Agency consistently seems to miss the mark necessitating pulling back from its proposals and gathering more data. 

Below is a portion of U.S. EPA's announcement:

Following the April 2010 proposals, the agency received more than 4,800 comments from businesses and communities, including a significant amount of information that industry had not provided prior to the proposals. Based on this input, EPA made extensive revisions to the standards, and in December 2010 requested additional time for review to ensure the public’s input was fully addressed. The court only granted EPA 30 days, resulting in the February 2011 final rules. The agency is reconsidering the standards because the public did not have sufficient opportunity to comment on these changes, and, as a result, further public review and feedback is needed.

EPA will accept additional data and information on these standards until July 15, 2011.

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Governor John Kasich has not revealed his true feeling regarding the Renewable Energy Portfolio (called the Advanced Energy Portfolio Standard in Ohio) which mandates a certain percentage of electricity should be generated from renewable sources like solar, wind, biomass and others.  Ohio's RPS was instituted as part of Governor Strickland's major energy legislation- S.B. 221.

While the Governor has not affirmatively announced a position, there appears growing sentiment he may be cool to the idea of energy generation mandates.  He recently announced an energy summit with Battelle in Columbus. The Summit will be held on September 21st ad 22nd and will be called "Ohio Governor's 21st Century Energy & Economic Development Summit." Leaders from energy, business, education, government and economic development have all been asked to participate.

However, his comments in announcing the summit suggest he believes major reform is needed and perhaps SB 221 needs review.

"Right now, Ohio essentially has no energy policy, but at the same time energy costs are major factors in the success of every sector of our economy, especially manufacturing and agriculture," said Kasich, as reported in The (Cleveland) Plain Dealer.

Reasons to Support RPS

Those in favor of the RPS say its a job creator by supporting green energy and suppliers to green energy development companies.  They also point to Ohio's heavy reliance on coal power- nearly 90% of generation.  While cost of baseload coal may be cheaper than renewable sources, the difference is shrinking due to advances in green technology and more and more regulation on coal.

The regulatory trend line for coal does nothing but continue to point upward.  With each new regulation the cost of coal power continues to climb.  Here is examples of regulations recently issued by EPA affecting coal:

• Rule on toxic emissions from power plants
• Toxic standards from industrial boilers
• Clean Air Transport Rule for coal fired power plants
• Revisions to the NAAQS, including a potential tightening of the ozone standard in August
• Potential regulation of coal ash (EPA seeking comments)
• Soon to be proposed cooling water intake structures rule
• New Source Review Enforcement Cases (Includes recent TVA settlement)
• EPA existing ad future greenhouse gas regulations

A shift away from Ohio's heavy reliance on coal will takes years to accomplish.  Supporters of S.B. 221 argue the RPS puts Ohio on a steady path to diversify its portfolio.

Opponents of RPS

Those who oppose RPS mandates argue it drives up energy prices by forcing utilities to purchase more expensive renewable energy.  As energy prices escalate, they argue, companies face higher operating costs.

The Debate Has Already Commenced

Supporters of S.B. 221 and the RPS are already starting to make their voices heard.  Perhaps they are anticipating a potential assault on Ohio's fledgling RPS.  

"Since inception of the energy law, over 1,700 renewable energy projects have been approved, including over 1,000 MW of wind power - enough energy to power over 300,000 homes." Guest Column Larry Feist is Program Chair in Electro-Mechanical Engineering Technology and Power Systems Engineering Technology at Cincinnati State Technical and Community College.  (Click here to read Cincinnati Enquirer Article)

Other states have already made the decision to increase their green energy mandates. Governor Jerry Brown signed into law Special Senate Bill 2, raising California's Renewable Portfolio Standard (RPS) from 20% to 33% by 2020.

Governor Kasich's budget slashed funding for renewable energy projects by 38% causing some in the industry to question his support going forward.  This from a Business First article:

The president of SolarVision LLC in Westerville said alternative power sources, such as wind and solar, take a backseat to drilling for oil and natural gas when he hears the governor talk about energy in the state. Kasich often mentions the promising potential for oil and natural gas wells in eastern Ohio where new drilling methods have opened up the huge Marcellus and Utica shale formations for development.

The debate in Ohio appears to be just heating up.  One thing is certain, businesses don't like uncertainty.  As long as the possibility that S.B. 221 and the Ohio RPS may be repealed or revamped, it creates uncertainty which creates head winds for projects moving forward. 

As the debate over the budget ends in July, there is no doubt that energy policy will once again take center stage especially with rising commodity prices.

(Photo: Great Valley Center Image Bank- Everystockphoto.com)

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The Ohio Department of Development working with the Ohio Water Development Authority (OWDA) has released their policies for use of the revamped low interest brownfield loan program.  Under the program, private companies (among others) can get a low interest loan up to $500,000 for performing sampling (assessment) and up to $5 million for clean up.

As discussed in my prior post announcing changes to the loan program, the single biggest change is that the loan program now allows companies that own contaminated property and caused or contributed to the contamination to qualify for the program.  Any company that caused or contributed to contamination is not directly eligible for Clean Ohio funding.

Here are some key requirements that are spelled out in the new policies governing the program.

• Clean Up Loans- Must already have done all the assessment and have designed a remedy to qualify for a clean up loan. 
• Redevelopment Requirement?-  The ODOD website says the project must involve redevelopment for the property to be qualify for the loan.  Therefore, it would appear an existing company with no expansion plans cannot qualify for the loan if they simply want to address historical contamination issues on property they own.  As discussed below, the actual wording of the policy may provide greater flexibility.
• Eligible Costs- assessment, demolition, remediation and consultant costs
• Payment Term- below market interest rate over a 10 year term

Biggest Disappointment

The most disappointing aspect of the policies governing the new loan program is the requirement for redevelopment of the property.   The loan program will have a very limited appeal to only existing companies responsible for historical contamination wishing to expand. 

However, the actual wording of the policy says projects are eligible "where expansion or redevelopment is complicated by known or potential releases of hazardous substances.”  This is far more open ended that requiring a demonstration actual expansion or redevelopment will occur.

Hopefully, ODOD and OWDA will allow a more expansive interpretation of this language. Why not give the benefit of the low interest loan to companies who simply want to address historical contamination on their property?  Certainly the State could justify rewarding these "volunteers" because the policy explicitly make clear any company that is under a legal mandate (order or permit requirement) to clean their property is ineligible. 

 Policy 1.03 CERCLA Limitation for Eligible Borrowers:

Policy 1.03- Borrowers must be exempt from Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), as amended CERCLA liability for hazardous substance cleanup applications.

I don't know what "exempt from CERCLA" really means.  Is this a reference to Bona Fide Purchaser defense?  There are very few exemptions from CERCLA for companies responsible for existing contamination.  Policy 1.03 could use further clarification.

Will There Be Interest?

Whle the greater flexibility provided by the new policies make the program more attractive, it will be interesting to see whether it garners any interest.  Even with the changes, the program will appeal to a small subset of companies looking to address historical contamination.  Any other party that has no responsibliity for contamination has a far better option under the Clean Ohio program.

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