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

The Diesel Emission Reduction Grant program (DERG) funds clean diesel projects, including diesel exhaust retrofits, engine repowers and replacements.  The program is intended to provide voluntary funding to reduce diesel emissions to assist Ohio in meeting federal air quality standards. 

The more voluntary reductions for vehicles the less reductions are needed from industry to meet federal mandates.  The DERG program offers an excellent way for companies across Ohio to help reduce environmental regulatory burdens without having the shoulder the lion share of the costs to make engine improvements. 

The budget bill provided $20 million over the next two years for the DERG program.  The administration of the program was also moved from the Ohio Department of Development to Ohio EPA.  The move should reduce the administrative burdens experienced under the old program because applicants will now deal with one state agency versus two.

Here is the initial approximate schedule for the first round of funding:

• October 2011:  Website and application are under development (http://epa.state.oh.gov/oee/derg.aspx)
• October - November 2011:  information sessions in several cities, release of RFPs
• January 2012:  proposals due
• March 2012:  DERG grant awards announced
• April 2012:  Project under Contract
• September 2012:  Next round of applications due
  

Information sessions are being held in cities across Ohio for interested
eligible Ohio applicants and vendors. The next scheduled DERG
information session will be held in Dayton on Tuesday, November 1, at
the Regional Air Pollution Control Agency at 117 S. Main Street.  More
information about the November 1, and future DERG information sessions
is available on line


An overview of the DERG program and additional information can be found on the Ohio EPA website.

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Rumors abound that the Kasich Administration is seriously considering totally overhauling the Clean Ohio brownfield grant program.  Multiple sources have indicated that the Administration is discussing internally making the next round of Clean Ohio the last for the program in its current form.

During the transportation engineers conference in Columbus, Governor Kasich made remarks that Clean Ohio would be reconstituted.  He said the program needs to improve upon providing funding projects that have the best opportunity to either create or retain jobs.

Back in April I wrote a post titled Clean Ohio Ends 2013....What Next?  In that post I discussed that the Department of Development was planning on four rounds for the competitive Clean Ohio Revitalization Fund (CORF):

• Round 11 in November 2011 (applications have already been submitted)
• Round 12 in Award in July 2012 (applications due in January or February)
• Round 13 in November 2012
• Round 14 in July 2013

In addition, to the Clean Ohio Assistance Fund (COAF) would receive new funding in July 2012 which would provide assessment (Phase II) funding through July 13.

The Kasich Administration may be planning on scrapping Rounds 13 and 14 and making Round 12 the final round.  If this happens it will make the final round highly competitive with many cities trying to cram projects in at the last opportunity. 

What Next?

There are no details that have been released publicly as to how the remaining funds (Rounds 13 and 14) may be used.  One possibility discussed was the Administration would proactively target sites rather than allow developers to join with cities in filing applications.  Another possibility would be to do away with the Redevelopment Ready and Sustainability Reinvestment tracks that do not require immediate development or jobs.

Its hard to comment on the merits of a new program when details have not been released.  However, there is no doubt the Clean Ohio program is extremely popular with all the cities as well as developers.  The program has been the key to allowing redevelopment on a number of highly contaminated and complex sites that would have otherwise sat idle.  In Ohio, where brownfields are too numerous, the COAF and CORF grants literally forced development onto underutilized or vacant properties. 

Because Clean Ohio was passed by the voters, it seems impossible for the Administration to redirect the money to other programs than brownfields.  However, the Administration does have the latitude to completely reshape the process for how sites get selected for funding. 

We will have to watch to see how it unfolds.  Regardless, it looks rather certain Clean Ohio as we know it will not look the same after the January Round. 

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One of the issues that can complicate a clean up is if multiple environmental regulatory programs apply to the site.  Even the same type of contamination may be required to be addressed under different programs and different processes.

A prime example of this issue in Ohio is the disconnect between Ohio's Voluntary Action Program (VAP) and the Bureau of Underground Storage Tank Regulation (BUSTR) which applies to petroleum underground storage tanks (USTs).  Until recent legislation, a BUSTR regulated UST was totally ineligible for clean up under the VAP.

As a practical matter, the ineligibility of BUSTR tanks can cause significant delays on a clean up project.  Why?  Because the property owner typically wants to eliminate the BUSTR eligibility issue first by investigating and cleaning up USTs under BUSTR regulations before proceeding with the VAP. 

If you don't front load the BUSTR clean up and proceed with the VAP, you can be left with what is called a "Swiss Cheese" covenant upon completing the VAP- you get a legal release (covenant not to sue- CNS) from Ohio EPA that excludes all areas failing to complete a BUSTR required clean up.

In order to avoid the "Swiss Cheese" CNS, property owners complete their BUSTR Tier 1 investigations and Tier 2 clean up, if needed, under BUSTR regulations first before completing the VAP.  This often prolongs a clean up by months or even up to a year.  It also adds costs to the project.

Does this really make sense when both VAP  and BUSTR clean up standards have been determined to be protective of human health and the environment?

New Legislation Creates BUSTR Class C

In an attempt to partially remedy the delays caused by the conflict between BUSTR and VAP, House Bill 152 amended the law on June 30, 2011.  The new law is effective as of September 28th.

The law states that certain BUSTR USTs- Class C tanks- can be cleaned up under the VAP without completing a BUSTR clean up first. The tank has to be removed in accordance with BUSTR regulations, but the soil assessment and clean up can be performed under the VAP.

A Class C release is defined as a release of petroleum subject to BUSTR laws, where the responsible person for the release is determined by BUSTR to not be a viable person capable of undertaking or completing the required assessment and clean up.  In other words, the responsible party has no money to perform the BUSTR clean up.

BUSTR can determine a UST is a Class C if the following apply:

• responsible party is deceased or bankrupt
• a review of financial records demonstrates the responsible party is financially unable to assess and clean up the release

Based upon an Ohio EPA fact sheet on the BUSTR Class C designation, 121 sites have Class C releases already determined (as of July 12, 2011).  

For more information here is a link to Ohio EPA's web page discussing the Class C designation.

Class C Designation Doesn't Go Far Enough

As discussed above, the fact BUSTR clean up regulations can apply to a VAP clean up can result in significant delays, added costs and additional complexities.  Both clean up programs are protective of the environment.  So, why not allow all BUSTR regulated tanks to be closed and cleaned up pursuant to the VAP?

I suppose the State's answer is, in part, if a viable party responsible for the tanks exists they shouldn't be allowed off the hook for their BUSTR clean up obligations.  This would be rewarding a tank owner who ignored its legal obligations.

The only problem with that argument  is that the ineligibility of BUSTR tanks for the VAP really hurts the volunteer more than it does the responsible party.  The volunteer wants an expedited and cost effective clean up. The volunteer often doesn't want to chase down the responsible party before completing its clean up.  Forcing the volunteer to address the outstanding BUSTR obligations first before proceeding with the VAP results in both delays and added costs to the detriment of the volunteer.

Why not at least allow a volunteer to address BUSTR tanks under the VAP without having to demonstrate the tank's responsible party is not viable?  You could still exclude the responsible owner from using the VAP.  This would at least not reward the UST responsible party, but would greatly assist the volunteer.

(Photo:  South Carolina Department of Health and Environmental Control)

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The Northeast Ohio Regional Sewer District (NEORSD) has entered into a settlement with U.S. EPA to fix its combined sewer overflow issues (CSOs).  Included in the settlement is a provision which requires NEORSD to spend $42 million in eight years to eliminate 44 million gallons of storm water from entering its sewer system.  This portion of the settlement is known as the "Green Infrastructure" component.  

At the same time NEORSD entered its settlement with U.S. EPA on CSOs, it has enacted its regional stormwater fee which will begin charging businesses a fee for stormwater that it sends to its collection system.  The fee is meant to create a strong incentive for businesses to implement stormwater projects that will reduce flow to the system.

The Sewer District is performing a large feasibility study to determine areas best targeted for green infrastructure projects.  The District is looking at using the many vacant lots (estimated around 6,000) to possibly perform projects. (See, "Turning huge vacant lots into stormwater areas and neighborhood centerpieces" from GreenCityBlueLake)

Hopefully the District will also see this as an opportunity to partner with businesses who will soon be experiencing the pain of another fee (tax) on their business.  Using the money not just on vacant lots, but with area businesses can help soften the blow of the fee.

If a businesses is going to qualify for a portion of the $42 million in funding available for the NEORSD Green Infrastructure program you must:

• Be in an area the District is targeting for reducing stormwater flow into its collection system;
• Eliminate flow that is currently getting into the collection system; and/or
• For new development projects- go beyond the stormwater controls currently planned
• Must also agree to provide NEORSD access to the project area if its on your property.

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