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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Concerns identified included:

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

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

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

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

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

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Back in June, the Supreme Court agreed to hear the case of Sackett v. EPA which could forever change the way EPA enforcement actions are defended.  While the case involves an EPA administrative enforcement order for unauthorized filling of a wetland, the ruling potentially impacts EPA enforcement under all its major statutes- RCRA (hazardous waste), Clean Air Act (CAA), Clean Water Act (CAA), and even CERCLA.

What is at issue?

When EPA believes a violation of its regulations has occurred it has the power to issue an administrative order compelling the alleged violator to remedy the issue.  EPA takes the position that the person/entity subject to that order cannot challenge the Order's validity prior to EPA taking a formal enforcement action in Court (referred to as "pre-enforcement review"). 

EPA's position leaves the person or company subject to the order with a Hobson's choice- either comply and incur the costs upfront or defy the order and face penalties for its noncompliance.

The courts have almost universally upheld EPA's position that its compliance orders cannot be challenged until it takes an enforcement action.  However, the Supreme Court has agreed to take a fresh look at this issue in the Sackett case.

Synopsis of Sackett Case

The Sacketts were building a residential home on their property.  EPA alleges that, during construction of the home, the Sacketts filled a 1/2 wetland without a permit. Filling a wetland without a permit is a violation of Section 404 of the Clean Water Act.   EPA issued an administrative order requiring the Sacketts to remove the fill and restore their property to its original condition.

Sacketts could either spend the money to remove the fill and restore the property or they faced penalties for non-compliance with EPA's order of up to $37,500 per day.  To give an idea of the risk the Sacketts must take if they did not comply, one month's worth of penalties could equal $750,000.

Sacketts petitioned EPA for a hearing to challenge EPA conclusion that their property had a jurisdictional wetland.  EPA did not grant the hearing, so the Sacketts filed suit making the following challenges:

1. No Bar to Pre-Enforcement Review of EPA's Order-  The Sacketts argue that the Clean Water Act ("CWA"), unlike CERCLA (Superfund), contains no express statutory bar to pre-enforcement review of administrative orders.  Therefore, the should be able to challenge the validity of EPA's order without risking being subject to civil penalties for non-compliance with the Order.
2. If there is a Bar to Pre-Enforcement Review it Violates Due Process under the Constitution-  In the alternative, if the Court finds that the CWA does contain an implied bar against pre-enforcement review, such a bar violates the U.S. Constitutional guarantee of Due Process.

 Game Changer?

If the Supreme Court agrees with the Sacketts, companies and individuals would be provided much better options when facing an EPA order.  Rather than immediately complying or risking penalties, they could challenge the EPA's order in Court.  Importantly, the challenge could be made before EPA has the legal authority to assert civil penalties for failure to comply with the Order.

This case involves EPA's enforcement authority under all its major statutes (CWA, RCRA, CAA and CERCLA).  This means EPA efforts to immediately compel action under any of these statutes through administrative orders would be practically be eliminated.  It would likely mean that EPA would, in many cases, skip the administrative order step and immediately sue in Court.

Legal Arguments

Implied Bar Against Pre-Enforcement Review

Only CERCLA contains an express bar in the statute against pre-enforcement review of administrative orders issued under the Act.  While the other environmental statutes (CWA, RCRA and CAA) don't contain such an express bar, the Administrative Procedures Act (APA) states that a bar exists if the "the congressional intent to preclude judicial review is fairly discernible in the statutory scheme."

The Ninth Circuit in Sackett said the bar was implied in the CWA because Congress intended EPA to have the authority to remedy violations quickly.  Similar arguments have been successful in other cases challenging EPA's authority involving other statutes.

The Supreme Court will review the Ninth Circuit's determination that an implied bar exists.

Bar Against Pre-Enforcement Review Violates Due Process

Even if the Court finds the implied bar exists, it could still say such a bar violates the Constitution.  At issue will be whether the negative ramifications of receiving a Unilateral Administrative Order constitute property deprivations protected by the Due Process Clause

General Electric ("GE") challenged EPA's Administrative Order authority when it received an CERCLA Order requiring clean up.  GE argued that its stock price could suffer, its brand would take a hit and it could face higher financing costs.  GE said all of these negative ramifications were enough a property deprivation to require due process (i.e. the ability to challenge the Order pre-enforcement).

The D.C. Circuit rejected GE's arguments.  It said GE could always challenge any penalties for noncompliance once EPA brought an enforcement action in Court.  It also found the consequential impacts on GE from receiving the Order were not significant enough to merit due process protection.

Conclusion

The odd thing is that the Supreme Court agreed to hear the Sackett case.  Only three weeks earlier it rejected GE's petition on the Due Process issue.  Also, regarding the existence of an implied bar, there appears to be no split among Circuits on the issue that typically is a basis for the Supreme Court to review an issue. 

The fact that the Court agreed to hear the case suggests some on the Court are uncomfortable with the current state of the law.

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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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One of Governor Kasich's top priorities is to restructure the Ohio Department of Development shifting some of its core functions to the private sector. The General Assembly passed the JohsOhio Bill which launched an evaluation of the current Department.

The bill allowed for the creation of a non-profit corporation which would assume some of the duties and responsibilities of the existing Department. The bill also required the Director of the Ohio Department of Development to evaluate all powers, functions, and duties of the existing Department and submit a report to the General Assembly that includes recommendations in the following areas:

• Improve the functions and efficiency of the Department
• Transfer specified powers, functions, and duties to other existing state agencies or to JobsOhio (private sector entity);
• Eliminate specified powers, functions, or duties of the Department.

On August 18^th, the Administration released its report with the results of its review and proposal for restructuring the Ohio Department of Development to the Ohio General Assembly. In the report, the Administration makes the recommendation to transfer core duties to the non-profit corporation. The Department will also undergo a restructuring relative to those duties and responsibilities that remain with the Department.

JobsOhio Duties

The following functions will be moved to the non-profit corporation:

·        Office of Business Development- responsible for jobs retention, expansion and location. This includes incentive packages to attract or retain companies.

·        Office of Grants and Tax Incentives- responsible for grants and tax incentives associated with business attraction and development.

·        Office of Loans and Services- loan origination and servicing

·        Ohio Tourism- marketing of the tourism in the State

Ohio Development Services Agency

The old Ohio Department of Development will be renamed the Ohio Development Services Agency. It will have three key divisions that will retain a large portion of the remaining functions of the current Department.  The new organization of the Agency will consist of three divisions:

·        Business Services

·        Community Services

·        Operations

Impact on Environmental Grant Programs (Clean Ohio)

The Clean Ohio and Jobs Ready Site programs are the two largest grant programs available for redevelopment of brownfields. These programs will remain government functions and be housed under the Community Services Division of the newly formed Ohio Development Services Agency.

The report includes additional recommendations from stakeholders and staff about changes to the urban development functions including the Clean Ohio program. One possibility apparently not seriously discussed was moving these functions over to Ohio EPA’s brownfield program.  Other improvements suggested including reducing public notice periods and expediting grant administration.

It appears that the Clean Ohio program will largely be untouched by the major transformation at the Ohio Department of Development. The only possibility could be staff reductions. The report contains the following chart showing significant staff reductions. However, the report notes that most of those reductions will be through attrition (i.e. as people leave they won’t be replaced). 

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It is no secret that EPA and its wave of recent and forthcoming regulations have stirred up much angst among Republicans in Congress. Many industry groups argue that EPA's rulemaking, especially its anticipated announcement of a much stricter ozone standard, will have a devastating impact on our fragile economy.

While plenty of bills have been floated since the start of the Obama Administration to try and stop EPA from enacting rules, in particular climate change related regulations, those efforts have been unsuccessful. So long as there is a power split between the House and Senate, any proposal to rein in EPA is a non-starter

The best the Republican controlled House has been able to do is call in EPA to testify before House Subcommittees to put pressure on EPA directly. Those efforts have had little success as the regulations continue to emerge from the Agency.

Now comes the debt deal and its initial $1 trillion in budget cuts. Due to political wrangling the cuts come almost entirely from discretionary spending which makes up approximately one-fifth of the total federal budget. Republicans see the cuts an opportunity to push forward their anti-regulatory agenda through significant funding reductions that will effectively prevent EPA from being able to act.

EPA and Renewable Energy Programs on the Chopping Block

Both Republican and Democrat lawmakers have indicated that funding for EPA and other federal agency programs that benefit the environment and renewable energy are surely to get hit and get hit hard.  EPA staffing cuts in programs implementing climate regulations, air programs and water infrastructure will result from the first round of the $917 billion in cuts called for in the debt-ceiling deal.  The Department of Energy will likely see less funding for grants, loans and other programs for renewable energy.

Time Magazine said the hidden Republican agenda in the debt-deal battle was to "gut the EPA."

It was lost in the endless drama of the debt-ceiling negotiations, but last week, the Republicans in charge of the House of Representatives launched an unprecedented attack on the U.S.'s environmental protections. GOP Representatives added rider after rider to the 2012 spending bill for the Environmental Protection Agency and the Interior Department, tacking on amendments that would essentially prevent those agencies -- charged with protecting America's air, water and wildlife -- from doing their jobs.

While the riders were unsuccessful, the dramatic budget cuts seem inevitable.  This from Politico discussing likely cuts to EPA and renewable energy programs:

“These guys are looking at 20 percent real cuts in the next two or three or four years,” said GOP strategist Mike McKenna said. “That’s a big, big hit for an agency to take.”

 Lawmaker Says Cuts will Mean More Lawsuits

While the EPA will have less staff to implement its programs and develop new regulations, EPA still faces statutory mandates to enact rules.  EPA routinely is sued by environmental groups trying to enforce these statutory deadlines.  One such example is the ozone standard which EPA is under a Court order to act.  

Jim Moran, D-Va., ranking Democrat on the House Interior-Environment spending subcommittee predicted an avalanche of new suits seeking to compel EPA to act.

"The irony is that the law isn’t going to change, it’s just that the people whose job it is to implement the law won’t be able to do that, so the environmental issues will play out in the courts instead of administratively or over a negotiating table," Moran told National Journal. "It’s more costly, it’s more time-consuming, and usually it’s less satisfying." 

While reducing funding can slow down EPA's ability to act, its a much messier then changing the law.  As long as the law remains the same, the regulatory environment really won't change for industry.

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Competing bills have been introduced to the Ohio Legislature which are designed to implement the Great Lakes Compact.  The Compact was passed by the other States that border the Great Lakes.  Its fundamental purpose was to establish a new regulatory structure over water withdraws from the Great Lakes.  

In 2008, Ohio passed H.B. 416, by which Ohio officially became part of the Compact.  After all states passed endorsements of the Compact, it was approved by Congress.  While the Compact set up the regional structure for regulation of water withdraws, the nuts and bolts of the program were left to States through implementation legislation. 

If a State fails to pass its own implementation legislation, then the Compact has provisions that automatically become applicable in the State. Ohio wants to avoid the automatic standards and is moving forward now with implementation legislation.

Some of the key issues decided in the Ohio's implementing legislation include:

• What size withdrawal from Lake Erie or its tributaries will require a permit?
• What industries or types of withdrawals should be entirely exempt from the water withdrawal regulatory process?
• If the size of the withdraw triggers the need for a permit, what is the standards for determining issuance of the permit.  Principally, will the withdraw have adverse impacts?
• Are tributaries meant to be protected under the Compact or was the goal to protect the lakes themselves?

One legislative proposal is being supported by industry and the other is being pushed by environmental groups.  The proposals take vastly different views of the purpose the Great Lakes Compact.

Reasons for Passage of Compact at the Center of Ohio Debate

The seeds for passage of the Compact were laid in 1998 when Nova Group, a Canadian company, saw an opportunity to meet the growing fresh water needs of Asia and received a permit to export 158 million gallons per year of water from Lake Superior. The permit was eventually retracted.

However, the Nova proposal coupled with the growing scarcity of water in the western states raised fears the Great Lakes, which holds 20% of the world's fresh water, would drained by exports to areas in need of fresh water.  The Compact was seen as a means to create a new legal structure to prevent unregulated exports out of the basin. 

As the Compact was developed it added water conservation measures to the mix, including allowing States to regulate withdraws by any business within their boundaries.  The question remained as to how much regulation local businesses who were not exporting water should be subject o under the Compact.  The Compact left that debate up to the individual states who were provided flexibility to shape their own programs.

In Ohio, the debate has become a classic example of economy versus environment.    At its core, the debate centers on whether an enhanced water conservation and regulatory program is needed.

H.B. 231 Sponsored by Rep. Wachtmann (Companion Bill in Senate Sponsor- Sen. Grendell)

H.B. 231 Great Lakes Compact Implementation Legislation is supported by a variety of industry groups (Ohio Chamber, Ohio Manufacturers Association, Ohio Farm Bureau, etc.).  In addition, the Kasich Administration has testified in support of the Legislation. 

Key provisions in H.B. 231:

1. Trigger thresholds for permit-  As outlined in a recent Dispatch article, the bill would set some of the highest trigger thresholds of any of the States who passed the Compact.  Withdraws from Lake Erie trigger a permit at 5 million gallons per day (gpd).  The lowest trigger is for small high quality streams, with a withdrawal requiring a permit at 300,000 gpd. Michigan has triggers of 2 mgd for lake withdrawals and 100,000 gpd from streams.  Pennsylvania and New York require permits at 100,000 gpd no matter the location of the withdrawal.
2. Adverse Impacts-  Under the Compact, a permit cannot be issued if it results in adverse impacts.  Under the bill, only impacts to Lake Erie can be considered and not potential impacts to a stream where the withdrawal occurs.  As to lake impacts, the bill defines adverse impacts in the negative- anything at below 90 mgd from the Lake or 45 mgd from groundwater is presumed not to cause an impact.(Note:  the bill uses the term "annual mean runoff" but those figures can be converted roughly to the mgd figures noted above) 90 mgd is a very large withdrawal, there may be only one current user with that large of withdraw.

Key perspectives shaping the legislation:

• Avoid Creating New Regulations that Do Not Address a Real Problem-   Groups supporting H.B. 231 note the lack of examples where businesses who withdrawal for industrial or agricultural purposes are having a negative ecological impact on the Great Lakes as direct result of that withdrawal.  They argue implementing legislation should focus Compact requirements on preventing exports of water to other states outside the Great Lakes or to other countries.
• Avoid Creating Additional Regulatory Hurdles for Economic Development-  The implementing legislation establishes a major new environmental regulatory program that could complicate business expansions or prevent new facilities from being built in the Great Lakes region.  If Ohio has less regulation it could put the State at a competitive advantage to attracting new business.

 H.B. 257 Sponsored by Rep. Murray (Companion Bill in Senate- Sponsor Sen. Skindell)

A competing bill H.B. 257, was introduced which is supported by environmental groups and offers a stark alternative to H.S. 231. 

Key Provisions:

1. Trigger Thresholds-  At the high end, for Lake withdraws the bill sets a trigger level of 2.5 mgd.  The other trigger levels are based on size of the stream and go as low as 10,000 gpd.  These triggers would be close to those enacted by other states, but would be more restrictive for high quality streams.
2. Adverse Impacts-  The bill defers to rulemaking the standards for determining adverse impacts.  However, the rule's definition of "adverse impact" would have to be based on a science based assessment that includes an analysis of whether stream flows would be protective of aquatic life.  Furthermore, impacts to streams would be considered.

Key perspectives shaping the legislation:

• Passage of Compact Included Water Conservation-  Those supporting a more restrictive regulatory program argue that water conservation programs and regulation of local withdraws were part of the bargain in passing the Compact.  They argue Congress, with members of states outside the Great Lakes states, wanted to see requirements regulating "local withdraws." That was the bargain struck for there to be broad support of the Compact in Congress.
• Streams Need Protection from Impacts from Withdrawals-  Environmental groups argue that large withdraws that go beyond a stream or rivers capacity can harm the ecological quality of those streams.  Therefore, Ohio should go beyond protecting just the lake itself and include the rivers and streams that feed Lake Erie.

Editorials across Ohio Newspapers have focused on comparing the standards in H.B. 231 to neighboring states.   

Toledo Blade Editorial on Great Lakes Compact

Cleveland Plain Dealer Editorial on Great Lakes Compact

Akron Beacon Journal Editorial on Great Lakes Compact

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Back on January 18th President Obama issued Executive Order 13563 requiring federal agencies to consider the impacts of new regulations and to perform a self assessment of existing regulations.  For existing regulations, the President requested the agencies perform an analysis to determine whether rules are "outmoded, ineffective, insufficient, or excessively burdensome." 

After performing self-examinations, each agency was ordered to do the following:

"Within 120 days of the date of this order, each agency shall develop
and submit to the Office of Information and Regulatory Affairs a preliminary
plan,..to determine whether any such regulations should be modified, streamlined, expanded, or repealed so as to make the agency’s regulatory program more effective or less burdensome in achieving the regulatory objectives." (emphasis added)

On May 24th, U.S. EPA issued its preliminary plan, titled "Improving Our Regulations:  A Preliminary Plan for Periodic Retrospective Reviews of Existing Regulations."   EPAs preliminary plan falls way short of the goals articulated in the President's Order. 

Specifically, the preliminary plan calls for very little review of existing regulations to determine if they should be modified or repealed.  In fact, the EPA's plan in some cases calls for new regulations, including:

• SSO Blending Rule
• MACT Rules to "reduce emissions through the use of technologies and practices to achieve multiple benefits"

In other cases, EPA calls for additional rules to "clarify" or "streamline" requirements.  Often efforts to clarify simply mean additional regulations increasing complexity:

• Water Quality standards- EPA intends to clarify antidegredation and  variance provisions, among other requirements;
• Clean Air Act Title V-  streamline by use of electronic filings

What is missing from EPA's proposal is an acknowledgment that some key regulatory programs should be reviewed to determine if there is simply a more efficient and effective way to achieve the same goals.  Or, whether some regulations are outdated.

EPA Should Listen to the Business Community in Developing its Plan

The President's Order only gave U.S. EPA 120 days to develop a preliminary plan.  That did not leave much time for public input prior to development of the plan.  The EPA's plan is open for public comment until June 27th.  Click here to an EPA link to comment on the plan

Because EPA has already developed its plan pursuant to the Order its much harder to make wholesale changes to plan that is already in writing.  More than likely, EPA will tweak the existing plan some based on the comments it receives.

However, by simply packaging some existing tweaks to rules and policies as its regulatory analysis EPA is simply playing around the edges.  EPA is missing a golden opportunity to look at fundamentally overhauling its more complex and controversial rules.  While I believe there are multiple examples of regulations that deserve a complete overhaul, I think one particular program serves as a shining example: 

New Source Review-  The NSR program is highly complex.   It also involves far too much subjectivity.  Courts have reached vastly different conclusions regarding whether NSR was triggered in cases involving very similar projects and fact patterns.  To make matters worse, NSR has recently been applied to greenhouse gases which raises dramatically the impact of the program.  Perhaps no EPA program symbolizes more the frustration of the regulated community and is in serious need of review/overhaul.

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On April 5th, Ohio EPA Director Nally testified on the Agency's proposed budget before the House Finance and Appropriations – Agriculture and Natural Resources Subcommittee.  According to the Director's Testimony, Ohio EPA is not asking for any fee increases.  Ohio EPA's proposed budget calls for a reduction of 11.8% for fiscal year 2012 and 13.8% for fiscal year 2013.  To meet these budget reductions, the Agency is planning on reducing 53 current positions through attrition.

The Director also mentioned the consolidation of the Division of Hazardous Waste Management  (DHWM) into the Division of Solid & Infectious Waste (DSIWM) along with other components in the Division of Emergency Remedial Response (DERR).  DHWM's permitting and inspection activities will be in DSIWM and clean up will be with DERR.

In addition to budget reductions and the consolidation of DHWM, Director Nally also hinted at other initiatives the Agency is planning to undertake in the near future. 

New Ohio EPA Initiatives

“In-lieu Fee” Program –  The Director signaled potential significant change on wetland and stream mitigation requirements.  Typically the 404/401 permit applicant must find appropriate mitigation projects and include those proposals in their permit application.  With an “in-lieu fee" program, the applicant is relieved of the burden of finding a mitigation project .  Rather, the applicant pays a few based on the acreage of wetlands or feet of stream impacted by the project.  The Director has recently announced a "listening session" to hear from the regulated community and others regarding the proposal.

Permitting efficiencies/Permitting Backlog – Most every Ohio EPA Director faces the pressure to get permits out the door faster.  Director Nally is no different.  Upon taking office, he announced this would be a top priority of his administration.  His testimony suggests he will be re-looking at permit-by-rule and general permits to streamline permit approvals.  While the Agency has utilized these tools in the past, business complain that the terms and requirements are too onerous.  Modifying air permitting requirements can present unforeseen issues, as the business community learned after the Courts stepped in blocking major changes adopted in Senate Bill 265.

IT initiatives and Compliance Assistance –  Ohio EPA has moved toward allowing more reports and permitting to be performed using the web or through special electronic systems.  These systems provide flexibility, but businesses complain they can be difficult to use.  The Director announced training sessions to assist businesses with understanding how to use these systems better. 

Brownfields redevelopment – The Director testimony contained a vague reference to a new initiative with brownfield redevelopment.  The current structure has the Ohio Dept. of Development passing out the grant money and Ohio EPA monitoring the clean up.  It will be interesting to watch whether Ohio EPA announces new initiatives in this area to accelerate re-use of  brownfields.

Marcellus and Utica Shale – ODNR has the lead with regard to permitting for gas exploration.  However, U.S. EPA has indicated it will be closely watching and may exercise enforcement authority at sites where drilling has gone wrong or resulted in polluted groundwater.  The Director intends to support ODNR's efforts in light of U.S. EPA's scrutiny.

Expedited Settlement Program (ESP) -- No details were given regarding this new concept to accelerate resolution of enforcement actions.  Here was the Director's testimony...Given my priority of compliance first, I am initiating modifications to the current enforcement process to help drive quicker compliance.  Historically, the existing enforcement options have been time consuming and resource intensive for both the agency and the regulated entity. By developing new steps to be used early in the enforcement process, I hope to resolve uncomplicated cases
expeditiously, putting a facility on notice of a problem, and quickly achieving compliance. 

Perhaps Ohio EPA intends to make modifications at the Notice of Violation (NOV) stage.  The Agency could improve tracking of NOVs and notify businesses more quickly when issues have been resolved.

The Director's testimony did provide a good insight into his early priorities.  Details were not provided so we will need to watch closely as they are released.

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As reported in the Columbus Dispatch, Ohio EPA has experienced a drop in revenue attributable to reduced fees collected associated with its various programs due to the recession.  Governor Kasich has not proposed any fee increases to restore the loss in funding. 

Fee increases are seen as additional direct taxes on business which runs counter to the Governor theme of restoring a pro-business environment to Ohio.  Here is the discussion of the budget impacts reported in the Columbus Dispatch:

Since 2005, the Ohio Environmental Protection Agency has relied on fees it collects from businesses to fight pollution and clean the state's air, land and water.

It's an arrangement that worked pretty well until the recession hit. EPA officials hoped to collect $130 million this fiscal year, but estimate they'll fall short by $21.4million.

That led to the proposed 11.8 percent overall spending cut in Gov. John Kasich's proposed two-year budget plan, which begins July 1.

The article reports that the loss in revenue will not lead to layoffs, but Ohio EPA will eliminate 14 vacant positions. From some Ohio EPA staff I have talked to the Agency will also experience a slow attrition because it will not filling vacant positions with departures or retirements. 

The Collective Bargaining Bill (S.B. 5) is also having an impact on the Agency beyond the changes to the law.  It has accelerated retirements of long time Agency employees who fear that S.B. 5 is the first step toward additional changes to the State's retirement system (PERS).  Long-time employee (30 years of experience or more) are leaving in hopes of locking retirement benefits under the current structure.

The loss of institutional knowledge will have a greater impact than the elimination of vacant positions or a de facto hiring freeze.  Staff with thirty years of experience have managed numerous challenging sites, permits and issues.  They also understand the history behind various environmental programs.

While young staff can bring a much needed fresh perspective to management.  Experienced staff are often the most capable problem solvers. 

The  cuts and loss of experienced staff also coming at a time when U.S. EPA continues to place more and more work on State EPAs.  The loss of staff couples with additional demands means Ohio EPA will need to do even more with less...to borrow a phrase from former Governor Voinovich.

(Chart from Dispatch Article)

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The U.S. Chamber commissioned a study of the economic impact of project that have been delayed or canceled as a result of federal and state permitting processes. As described by the U.S. Chamber on its website:

This study estimates the potential loss in economic value of 351 proposed solar, wind, wave, bio-fuel, coal, gas, nuclear and energy transmission projects that have been delayed or canceled due to significant impediments, such as regulatory barriers, including inefficient review processes and the attendant lawsuits and threats of legal action.

The Chamber does acknowledge you can't blame the fact these project did not move forward exclusively on permitting:

As noted above, we do not believe that all of the subject projects will be approved or constructed even in the absence of any legal and regulatory barriers. Also, as with all economic forecasts, we recognize that there is an element of uncertainty. This could be true here because, to our knowledge, this is the first empirical study to quantify the macroeconomic and employment impact of the regulatory barriers imposed on the development and operation of so many energy projects.

The Study is a first real attempt to aggregate data on the impacts regulations on development. Below is a snaptshot of projects at issue in Ohio.

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Rumors had been swirling that there would possibly be a merger between Ohio EPA and the Ohio Department of Natural Resources (ODNR) in an effort to consolidate programs and reduce staff.  Such a proposal was debated in the prior Ohio Legislature as part of larger plan to reduce the total number of State Agencies.  Its possible that as budget discussion progress that proposal will see new life.

While State Agency mergers remain a possibility, Ohio EPA has already started to reorganize internally. Without an official announcement, word is that the Division of Hazardous Waste Management (DHWM) will be broken apart and portions merged with the Division of Solid and Infectious Waste Management (DSIWM) and the Division of Emergency and Remedial Response (DERR). 

The solid and hazardous waste permit writers and inspectors will be working together under one newly formed Division.  The DHWM clean up staff (RCRA closure and Corrective Actions) will be merged with the DERR staff.

With the dwindling number of permitted hazardous waste (RCRA) facilities, such a reorganization makes practical sense.  This will provide the Agency the opportunity to review work loads and reallocate staff to meet current needs.

Perhaps the most interesting portion of the reorganization to watch will be the merger of the DHWM clean up staff with DERR.  The line between Voluntary Action Program (VAP) clean ups and regulatory clean up in other programs has become increasingly thin.  For example, RCRA Corrective Actions can now be completed by entering the VAP program.

The administrative costs and clean up standards for standard RCRA closures are still much more onerous than VAP clean ups.  Will the merger of this staff lead to a reassessment of how clean ups are conducted?  While federal regulatory requirements still limit the State's flexibility to some degree, there remains the possibility for more common sense and consistent approaches to clean up.

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I'm taking a break from the typical focus of my posts to address an article that just makes me crazy.  Forbes has come out with its annual "Most Miserable City List."  Last year Forbes ranked Cleveland No.1 and this year it dropped to No.10.  This is how Forbes described this year's Cleveland ranking:

Last year's most miserable city, Cleveland, fell back to No. 10 this year despite the stomach punch delivered by LeBron James when he announced his exit from Cleveland on national television last summer. Cleveland's unemployment rate rose slightly in 2010 to an average of 9.3%, but the city's unemployment rank improved relative to other cities, thanks to soaring job losses across the U.S. Cleveland benefited from a housing market that never overheated and therefore hasn't crashed as much as many other metros. Yet Cleveland was the only city to rank in the bottom half of each of the 10 categories we considered.

First of all, I thought Forbes was considered a business magazine.  Since when does a pop culture development like a star basketball player leaving get factored its analysis?  But beyond this simple fact, Forbes has no clue as to what is happening in Cleveland right now.

There is a building boom in downtown Cleveland with over $2 billion dollars worth of construction and this construction boom is occurring during one of the toughest economies.  This new construction includes the Medical Mart and New Convention Center, Inner Belt Bridge Project, Flats East Bank Project, Aquarium, and Casino. 

The Cleveland Plain Dealer, a paper in my mind notorious for dwelling on negatives, had an editorial this weekend recognizing the positive developments in the Greater Cleveland region.  Those included:

• With evidence growing that manufacturing is actually leading the nation's economic recovery, unemployment in Greater Cleveland has been running a full percentage point below the national average.

• Monster.com just named Cleveland the seventh-hottest job market in the country.

• Venture capitalists poured $221 million into this region last year -- double the pace of such investments in 2009.

• The Milken Institute, a think tank that has consistently ranked Ohio among the least fertile states for innovation, just cited the state as its most improved for entrepreneurial activity.
 

Want even more indications of Cleveland's positive direction?  From reforming local government to visionary new projects, Cleveland is heading in the right direction.

• Travel & Leisure Magazine just name Cleveland one of the most visionary cities in the world for its urban farming efforts, including its mall to greenhouse transformation.  Only two other U.S. cities were even on the list.
• Entrepreneur magazine recently ranked Northeast Ohio as one of the hottest entrepreneurial regions.
• There is an on-going $350 million dollar renovation of the Cleveland Museum of Art transforming it into a showplace museum.
• Government corruption is part of the criteria Forbes reviews, but it failed to consider recent developments.  Most cities do little about corruption issues and just try and get by.  No doubt Cleveland had its issues, but in November, local voters passed a ballot measure which completely reforms local County government. 
• Cleveland has an organized and progressive sustainability movement which is serving as a model to other Cities-  Sustainable Cleveland 2019.  Partially in recognition for these efforts, a 2008 ranking had Cleveland jumping 12 spaces to the 16th most sustainable City in the U.S. and a lot has happened since then.
• According to U.S. News and World Report, Northeast Ohio hospitals ranked in the top 10 of 11 specialty areas, including heart, pediatrics and urology.
• TripAdvisor.com recently cited Cleveland as one of the top 10 most underrated destinations in the world
• Cost of Living- A family of four can enjoy amenities and attractions in Northeast Ohio, comparable to any other major city or region in the nation, and save as much as 35%.
• Site Selection Magazine named Ohio, for the fourth year in a row, as having the most new or expanded private-sector capital projects edging out Texas for the top spot.

One of the biggest issues facing Cleveland is its own inferiority complex.  Articles likes those written by Forbes don't help to lift the region. To combat this issue, leaders organized an on-going branding effort to accentuate all the positive development in the Greater Cleveland region- Clevelandplus. (Check it out for the latest positive developments).

Before a magazine like Forbes creates a rankings that tags a city with a negative image, perhaps it could spend a little more time gathering information.  No doubt it overlooked all the recent developments I have highlighted.   

Maybe Forbes should issue a correction- Cleveland, one of the top 10 most improved Cities.  Just like Clevelanders, instead of dwelling on negatives, perhaps Forbes can start recognizing positive developments in its publication.

(Photo:  Innerbelt Bridge Design- ODOT webpage)

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Recently, the Toledo Blade had a story on the recent court ruling regarding the FDS Coke permit.  The FDS permit has been the subject of numerous appeals which have dragged on years.  The 10th Appellate Court recently issued a ruling sending the FDS  permit back to the Environmental Review Appeals Commission for determination of whether construction had begun in order to maintain the validity of the permit.

The FDS permit had a condition that a continuing program of construction must be commenced to maintain the validity of the permit.  The Court said more information was need to determine whether the permit was still valid.

The ruling is largely irrelevant for future air permits due to a legislative change that allows permits to be valid so long as an appeal is pending. R.C. 3704.03(F)(2)(b)(iv) was revised to expressly suspend the expiration clock for air permits during a third party appeal.  It states: 

(iv) The installation permit is the subject of an appeal by a party other than the owner or operator of the air contaminant source that is the subject of the installation permit, in which case the date of termination of the permit is not later than eighteen months after the effective date of the permit plus the number of days between the date in which the permit was appealed and the date on which all appeals concerning the permit have been resolved.

However, its another legislative change to the appeal process that I want to comment on.  The Blade included the following in the story regarding the FDS Coke decision:

In 2005, former Ohio EPA Director Joe Koncelik took the unprecedented action of modifying the permit while it was still under appeal, softening it for FDS. That action was ruled invalid, prompting Gov. Ted Strickland to seek a permanent change in state law that would allow such modifications to occur. The Ohio General Assembly approved it, giving greater power to state EPA directors.

The permanent change referenced was Am. Sub. H.B. 119 (September 2007) which modified the language in Revised Code 3745.04 to state:

The environmental review appeals commission has exclusive
original jurisdiction over any matter that may, under this
section, be brought before it. However, the director has and
retains jurisdiction to modify, amend, revise, renew, or revoke
any permit, rule, order, or other action that has been appealed
to the commission.

The story implies that the bill was some sort of power grab for Director's of Ohio EPA.  In fact, it is necessary authority given the reality of our permit appeal process. 

It is not unusual for permits to be under appeal for years.  During that time period circumstances can change that warrant modifications, revisions or revocation of a previously issued permit.  It could be changing regulations or environmental conditions that push the need for the change. 

If the law was left as it stood after the ruling saying Director's could not modify permits under appeal, it would effectively freeze these action in time while ever changing environmental conditions and regulations march forward.  The legislative change was a logical reaction to this reality.

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Last week, Governor-Elect Kasich named the new Director's for Ohio EPA (Scott Nally) and the Ohio Department of Natural Resources (David Mustine).  At the press briefing, Kasich reiterated his election theme of returning business growth to Ohio.  This from the Columbus Dispatch:

"These departments are going to send a message to Ohio that we are open for business," Kasich said in naming Scott Nally of Indiana as head of the EPA and former American Electric Power executive David Mustine as director of Natural Resources.

Kasich, a former Republican congressman who will take office Jan. 10, emphasized that he doesn't plan to empower business at "the cost of environmental degradation." But in the next breath, he said he wants to "exploit the wonders of our state."

"When you have something that's really valuable, use it," he said in a briefing at the Rhodes Tower. That includes drilling for oil and gas in state parks and on state land, he said.

Additional Background on Both Appointments

Scott Nally

Current Title: Assistant Commissioner, Office of External Affairs for IDEM

Degree(s): Master of Science from University of Wyoming; Bachelor of Science in Biological Sciences from North Carolina State University

Special license(s): Wastewater Operator certified in Indiana and Virginia; Pesticide Applicator License certified in Indiana

Experience: Regional environmental manager at Perdue Farms Incorporated; numerous publications; held various positions in the environmental and biological sciences; served as president, chairman or board member on various county boards

David Mustine

David Mustine was a Senior Vice President for American Electric Power (AEP) for European business development.  More recently he had his own consulting business. He also served as an investment manager for a Bechtel Group.  He has a B.S. in business from Ohio State, an MBA from DePaul and a MA from Ashland Seminary.

Appointments Consistent with Kasich "Business" Theme

The Governor Elect was all about jobs, jobs and jobs during the election.  He said a key to addressing Ohio's high unemployment rate was creating a better business climate.

Both appointments appear consistent with those themes. Scott Nally served in The Indiana Department of Environmental Management (IDEM) which has been under the leadership of Tom Easterly since 2005 when Governor Mitch Daniels appointed him Commissioner.  Easterly has  had a strong emphasis in running IDEM with an eye toward assisting business in navigating complex environmental regulations. 

Mustine's background at AEP will certainly be viewed with a skeptical eye by many environmental groups in Ohio.  However, he brings a unique business background to a organization whose past two Directors were much more political- both were former State Senators. 

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Boiler MACT Rules-  On December 7th, EPA filed a motion with the Court requesting more time in order to re-propose the Boiler MACT rules and allow for public comment.  In EPA's motion to the Court, EPA sets forth following timetable if its motion is granted to move impending January deadline is moved to April: it will publish revised proposals no later than June 1, 2011, and promulgate the final emission standards no later than April 13, 2002. 

EPA states that more time is needed because significant issues with the proposed standards were raised in the public comment period and it needs more time to evaluate the technical merits of those comments.  This from EPA's motion:

As evidenced by the number of comments, which include a substantial amount of
additional new data, the major source boilers, area source boilers, and CISWI rules will have far reaching effects. Estimates of the monetized value of the public health benefits for all three rules combined range from $18 billion and $44 billion. The economic impacts of implementation of these standards will also be significant and vary by rule. For example, the nation-wide capital cost for the proposed major source boilers rule was estimated to be $9.5 billion in the year 2013, with a total national annual cost of $2.9 billion in the year 2013. The major source and area source boilers rules are expected to apply at almost 200,000 boilers at over 90,000 facilities. On balance, given the broad impact these rules will have, EPA believes that the overall public interest is best served by allowing EPA to re-propose the rules so that the Agency will be able to issue emission standards that are based upon a thorough consideration of all available data and reduce potential litigation risks.

Many are very relieved that EPA has decided to take a second look at its proposed standards.  The rules have wide ranging applicability and huge costs associated with them.

U.S. Supreme Court to Hear Climate Change Nuisance Case-  The Supreme Court has agreed to hear an appeal of Second Circuit's decision in American Electric Power v. Connecticut.  The lower court allowed several states, municipalities, and environmental groups to pursue a federal public nuisance action against a group of electric power producers for their emissions of greenhouse gases (GHGs). 

The issue of GHG emission contributing to climate change is global issue with millions of sources contributing.  The Court will examine how much a single subset of sources should be exposed to liability for their contribution to the issue.  

The lower court found the Plaintiffs showed the requisite grounds to bring the suit.  The Court found plaintiffs properly identified an injury, presented causation and redressability that should allow the suit to go forward.   The Supreme Court granted the petition to hear the appeal to review this determination.

Also at issue is whether federal nuisance actions have been displaced by U.S. EPA's recent promulgation of climate change regulations (monitoring, Endangerment Finding, Light-Duty Vehicle Rule, Tailoring Rule).  Federal nuisance actions are no longer available if it is determined that their is sufficient federal action to address the issue. 

If the Court finds federal nuisance action has been displaced by EPA's regulations, this may prove to by a phyrric victory for some.  Presumably, federal nuisance is only displaced so long as those regulation remain in place.  What should happen if congressional action delays implementation or litigation successfully overturns the Endangerment Finding?

Regardless, this will be a fascinating case to follow next year.

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Ohio is facing a $8 billion dollar budget gap.  Governor-elect Kasich has stressed the need to streamline state government as part of solving the budget crisis as well as making government more efficient. 

During his campaign he already announced one very creative proposal to eliminate the Ohio Dept. of Development.  Could an idea being tested in other states- combining State environmental programs-be a proposal worth considering in Ohio? 

Good in Theory?

A brief overview of the current state structure suggests combining responsibilities would gain efficiencies.  Similar functions and staff with similar capabilities are spread across five different state agencies. 

Combining functions and potentially agencies could benefit those organizations.  Greater efficiency is not only good for business, its good for agencies that are constantly fighting for funding to support their programs.

The counter argument is that combining large government agencies you run the danger of creating even a larger bureaucracy.  Not only could there be even more layers of management the organization could become too large to effectively manage. 

An Overview of the Current Ohio Structure

Most environmental regulatory functions are split between the Ohio EPA and the Dept. of Natural Resources.  However,  there are clean up, regulatory and grant programs related to the environment spread across a total of five different state agencies. 

Here is just a quick look at various functions that have commonalities and are divided up between multiple agencies.

Brownfield Redevelopment and Clean Up

• Clean Ohio Program- divided between Ohio Dept. of Development and Ohio EPA

Federal Water Pollution Permitting Programs

• Combined Animal Feeding Operations NPDES (Clean Water Act) permit program-  Department of Agriculture
• NPDES (Clean Water Act) permit program- Ohio EPA

Litter and Recycling

• Division of Soil & Water Resources (Previously Divisions of Soil & Water Conservation and Division of Recycling & Litter Prevention)- ODNR
• Division of Solid Waste Management (manages Solid Waste Management District recycling efforts)- Ohio EPA

Wetlands

• Environmental Review Program (Wetlands)- ODNR
• Division of Surface Water (401 and Isolated Wetlands Permitting)- Ohio EPA

Ground Water Management

• Ground water well information (within Division of Soil & Water Resources)- ODNR
• Division of Drinking and Ground Waters- Ohio EPA

Surface Water and Lake Erie

• Soil and Water Conservation programs - ODNR
• Coastal Zone Management Program - ODNR
• Great Lake Compact Program (Under development)- ODNR
• Lake Erie grants program- Lake Erie Commission
• Surface water Lake Erie Unit- Ohio EPA
• Surface water regulatory and permitting programs- Ohio EPA

Underground Storage Tanks

• Bureau of Underground Storage Tanks (BUSTR)- regulation and clean up of releases of hazardous substances from USTs- Dept. of Commerce
• Clean up of hazardous substances un-related to USTs- Ohio EPA
  Diesel Engine Grant Programs

Diesel Emission Reduction Programs

• Diesel Emission Reduction Grant Program- Ohio Dept. of Development
• School bus diesel emission grant program- Ohio EPA

The list of similar functions spread across multiple agencies is probably longer.   In addition to similar regulatory functions, each of these agencies maintain their own Information Technology Offices, HR, Motor Pools, Facilities Management, Press Offices and Director's Offices.  Combining support offices could also gain efficiencies.

Not a Budget Fix

After modifications to its funding strategy, Ohio EPA utilizes no general revenue funds to support its programs.  ODNR has substantially reduced its reliance on GRF.  So combining agencies is not going to do much to fix the $8 billion dollar budget hole.

However, both agencies (as well as the other three agencies) assess multiple fees to business to support their programs.  These fees have regularly been increased to support rising human resource expenses within the Agencies.  Fees, while imposing costs on businesses, have traditionally not received the same political attention as GRF.

While streamlining and combining functions may not solve the $8 billion budget hole, it could avoid or reduce the need to raise fees on businesses. 

For a discussion of what has occurred in other states...continue reading.

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On October 6th, the Federal Trade Commission (FTC) published the final revisions to the 1988 "Green Guides" which provide guidance to companies when making environmental claims regarding their products.  The FTC is seeking public comments on the proposed changes until December 10, 2010, after which it will decide which changes to make final.

The FTC can take legal action against unfair or deceptive marketing practices under Section 5 of the FTC Act.  The 1988 "Green Guides" provide standards for asserting environmental benefits or advantages of products.  However, the 1988 guides were outdated.  Since their release in 1988, the number of companies asserting environmental benefits relative to their products has grown exponentially as well as the type of claims being asserted.

The proposed revisions to the "green guides" (copy here) provide much more detail than the 1988 version.  For the first time issues such as- renewable energy claims, carbon offsets, and use of renewable materials are addressed in the proposed revisions.

Past court decisions highlight the importance of the guides.  Judges have been willing to abide by the guidance set forth in the guides in determining whether a claim constitutes an unfair or deceptive marketing practice. 

Here are some of the key proposed revisions:

• Stay away from general environmental benefit claims.  These general claims such as "green" or "eco-friendly" are almost impossible to substantiate.  The requirement to justify any green claims is a central requirement of the guides.
• Third Party Certifications- Seals or endorsement of environmental benefits will receive heightened scrutiny.  Any material connection to the certifier must be disclosed.  Also, a 3rd party certification doesn't eliminate the requirement to substantiate all claims.
• Renewable Energy-  If a company wants to say they utilize renewable energy in the manufacturing of their product, they better be prepared to provide more detail.  For example, if the company does not have its own wind or solar generation sources and is only purchasing RECs, it must disclose this as part of its claim.  If you generate your own renewable energy, but sell the RECs you cannot claim you use renewable energy.
• Climate Change-  The concept of "additionality" has entered into marketing claims regarding carbon offsets.  A company cannot claim it is offsetting its carbon emissions if those reductions were required by law.
• Recycling- Proposed revisions will create various tiers for claiming your product is recyclable.  If the product is only partially recyclable due to lack of access to recycling, then any recycling claim must carry with it certain qualifications.

This is just a brief highlight of the many topics covered in the revised guidelines.  Once the revisions are finalized, the guides will likely cause wholesale revisions to marketing campaigns for products.  While companies will still have a strong incentive to market the green attributes of their products, those campaigns will have lawyers reviewing the labeling, support for claims and mandatory qualifications required under the guides.

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In my tenure at Ohio EPA, no issue was as vexing as Environmental Justice (EJ).  In a nutshell, there is a legitimate issue behind the concept of EJ- low income and minorities are exposed to more pollution.  Here is how EPA presents the EJ issues:

Fair Treatment means that no group of people should bear a disproportionate burden of environmental harms and risks, including those resulting from the negative environmental consequences of industrial, governmental, and commercial operations or programs and policies.

The root causes of disproportionate impacts can be traced to the history of how our country developed and expanded. Lower income housing can typically be found near areas zoned industrial.  In our past, this occurred for easy access to plant and factories.  However, this history has carried forward and people living in these communities are disproportionately impacted by pollution. 

However, the difficulty was trying to address this social problem through EPA rulemaking or decision making on permits for new industrial facilities.  EJ issues come into conflict with concepts of urban redevelopment, brownfield redevelopment and creating jobs in low income communities. 

Are we really prepared to declare an industrial area off limits to new factories or manufacturing because the pollution burden is too great?  How would someone establish a standard for what is deemed too great an exposure?

How does EPA "regulate away" this social issue?  EPA struggled with answer to these questions for so long that is has released and than retracted EJ policies over time.  For long stretches the Agency simply put EJ issues on the back burner. 

Now, EPA has released its first new Environmental Justice guidance document in a long time.

EPA is required to develop procedures to evaluate EJ issues in its decision making process as a result of Executive Order 12898 which directs agencies such as EPA to do the following:

 “[t]o the greatest extent practicable and permitted by law,” to “identify[…] and address[…], as appropriate, disproportionately high and adverse human health or environmental effects” of agency programs, policies, and actions on minority populations and low-income populations.

EPA's new fifty page guidance document walks through a complex process for evaluating EJ issues in EPA decision making.  I think the chart below says it all.   Is this really helpful in addressing a complex social issue?

Reading the document, the EJ document is strinkingly similar to past efforts by EPA.  It really seems to boil down to two requirements that fall onto EPA staff.

1.  Ensure participation by low income and minority groups in the EPA decision making process-  the guidance offers suggestions for how to reach out to communities and make sure they are informed regarding EPA actions.

2.  Document that EJ issues were considered in the decision making process-  When EPA issues is response to public comments, it must include a description of the EJ issues that were identified and how those impacted the decision making process.

What the guidance document doesn't address- When EPA is required to take alternative action as a direct result of EJ considerations?  The reason EPA avoids setting such standards is that a uniform "regulation" would be nearly impossible to develop.  Therefore, the new guidance appears to be very similar to past EPA approaches to incorporate EJ considerations in its decision making-

1. Inform;
2. Consider the alternatives; and
3. Document how EJ issues were considered in the decision making process 

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Ohio does not have regulations governing the disposal or recycling of consumer electronic waste.  State legislation has been adopted by at least nineteen other states to encourage the recycling of e-waste and divert computers and other electronic equipment from landfills. 

Why manage e-waste differently? E-waste components can contain hazardous or toxic compounds that make it different than other household municipal waste. 

Recently, Representative Dennis Murray introduced legislation (H.B. 447) designed to encourage the recycling of e-waste in the state.  Sponsor testimony will be heard this Wednesday. 

The bill is directed at manufacturers who produce and sell computers, printers and video equipment.   Some of the key elements of the proposed legislation include:

• Registration-  Requires all manufacturers of electronics to register with Ohio EPA.
• Fee-  Manufactures must pay an annual registration fee of $5,000 to pay for administration of the program
• Take-Back Programs-  By April 2011 mandate computer and video display consumer take back programs.  Allow consumers to mail or drops of equipment at stores for recycling by the manufacturer
• Prohibit sales- Without registration or a take back program
• Reporting-  Manufacturers must report to the State on the success of their take-back programs

The Electronics Take-Back Coalition maintains a good website that provides information regarding state and federal efforts to mandate recycling of electronic waste.  The web site provides a great resource to compare and contrast state legislation that has been adopted in other states with the Ohio proposal.

The chart above from the Coalition web page provides some interesting information regarding recycling rates.  Certainly, more can be done in Ohio to manage e-waste issues.

The Legislation may cast too broad of a net (covering too many products) or places too onerous requirements on manufacturer take-back programs.  However, there is good information available to compare Ohio to the other nineteen (19) states operating programs.  Ohio stands to learn from what has worked and what hasn't worked in these other states. 

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A few weeks back I was contacted by the Cleveland Council on World Affairs (CCWA) to meet with a small delegation of representatives from Serbia who were interested in learning about environmental regulations, specifically those that relate to solid waste and/or recycling. While I was to be interviewed by the delegation members, I think I learned much more even though I wasn't asking the questions.  Here is a bit of background on the CCWA from their e-mail invitation:

The Cleveland Council on World Affairs (CCWA) hosts international leaders from all over the world year-round. Each year the CCWA hosts over 400 foreign nationals to meet and confer with their professional counterparts and to experience America firsthand. The visitors, who are selected by American Foreign Service Officers and U.S. Embassies overseas, are current or potential leaders in government, politics, the media, education, the arts, business and other fields. This program is sponsored and funded by the United States Agency for International Development (USAID)

Members of the delegation worked in the following areas:

• Journalist reporting on environmental issues
• Manager of an electronic waste recycler
• Member of a trade association for chemical manufacturers
• Manager for a public utility company
• Members of Environmental Groups
• Local Government
• Green business consultant
• Small business owner with recycling operation

What jumps out at me from the list above is that you have the same cross-section of organizations and individuals involved in environmental policy in the U.S.  Each individual is interested in representing their own constituents, business or advancing their own environmental principles. 

During the exchange I was asked to describe various regulatory challenges faced by businesses.  I was also asked, generally, about general attitudes of citizens toward protecting the environment or environmental issues.  Here are a few interesting observations or conclusions I made from the meeting:

1. Management of Electronic Waste-  The delegation was interested to learn that there were no mandates requiring individuals or businesses to recycle electronic waste in Ohio.  I was pressed on this point several times by members of the delegation.  They thought it was interesting that any citizen could carry his old TV out to the corner to be thrown away in a landfill.   Here is Ohio EPA guidance encouraging recycling of electronic waste. 
2. Used Tires-  While I think elimination of used tire piles is one of the biggest environmental success stories in the State of Ohio, the delegation provided a different perspective.  The laughed and smirked when told that an individual was allowed to accumulate 23 million tires on their property (Kirby Tire Pile).  For a country known for its sophisticated (if not overly complex) environmental regulations, it is somewhat odd this slipped through the cracks.  As a result, Ohio was forced to enact a new tax on tires and it took nine years to clean up the Kirby Tire Pile.
3. Renewable Portfolio Standards-  I was asked to provide some pretty detailed information regarding Ohio's Advanced Energy Portfolio Standard, including use of alternative compliance payments and renewable energy credits (RECs).  I was told that Serbia was working toward a RPS standard.  I thought it was interesting that a small European country was developing a very sophisticated energy program.
4. Jobs and the Environment-  I was asked to comment on general attitude of the public on environmental issues.  Some were interested in understanding how those attitude vary depending on what state you called home.  Overall, there seemed to be general understanding among the delegation of the interplay between the economy and environmental regulation which challenged my perception those debates were less heated in Europe than in the U.S.  Just like in the U.S., I got the feeling there was a wide range of opinions within the room.  Those opinions can change with time as well.  As noted in CNN recent poll on attitudes of Americans towards the root cause of global warming.

Overall, some of my own perceptions or paradigms regarding environmental regulation were challenged.  It usually takes someone or a group of people from the outside to get you to re-examine your own perceptions.  I found it very enlightening even though I didn't get to ask a single question. 

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The Obama Administration proposal for funding the Great Lakes, known as the Great Lakes Restoration Initiative (GLRI), has cleared a key House-Senate conference committee.  The legislation would provide $475 million for a comprehensive Great Lakes restoration and protection initiative.  The funding would be targeted toward the most critical environmental concerns facing the Great Lakes, including invasive species, toxic sediments, non point source pollutants and wildlife habitat loss.

While its wonderful news that increased funding is being directed toward the Great Lakes, there are key components of the legislation that could leave a large portion of the federal money unspent.  Those key components relates to clean up of contaminated sediment under the Legacy Act (the primary vehicle for providing federal funding for removal of sediments).

A recent U.S. EPA Inspector General Report was highly critical of the pace of clean up under the Legacy Act. 

Contaminated sediment is a massive problem in the Great Lakes. There is an estimated 75 million cubic yards of contaminated sediment. To date, under the Legacy Act, five sediment projects have been completed removing 800,000 cubic yards of contamination.  This represents about 1% of the problem.  As stated in the report, at the current pace, it would take more than 77 years to complete all the contaminated sediment projects in the Great Lakes.  

Now this is where I part ways with the Inspector General Report.  The IG placed the blame for the slow pace of contaminated sediment clean up on the lack of management within the Great Lakes National Program Office (GLNPO).  The real story is the lack of resources at the state and local level.

Cost of removal of contaminated sediment is estimated at $3 billion in federal, state, and local funds. The Legacy Act includes the requirement for a 35% local share before federal funds can be used for clean up. 

Sediment projects carry large price tags. Even a small sediment project can cost millions of dollars. While at least five project have been able to cobble together required 35% match, in some cases it took 5-10 years to generate the funds.  In many other instances there are simply not the resources to develop the required 35% match. 

The inability to generate this level of funding can be attributed to:

• Limited amount of companies with money to pursue who contributed to the contaminated sediment problem (known as PRPs); 
• Even if PRPs are identified, complex legal actions or settlements must be pursued which can slow the process for years;
• Furthermore, the current strain on local and state governments due to economic considerations, especially in the Midwest, makes state/local funding unlikely

As long as the millions in funding for sediment clean up in GLRI includes the 35% local share requirement, major portions of the federal money could remain sitting unused.  Statutory changes to the Legacy Act are needed to provide authority to waive or reduce the 35% local share if it can be demonstrated, for instance that:

• There are no or few PRPs;
• The project should be fast tracked based on human health or environmental risks:
• Local or State governments are constrained on their ability to contribute more of the local share

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The saga involving the Environmental Review Appeals Commission (ERAC) appears to have come to a conclusion (see prior post). ERAC had limited all administrative hearings to 1-hour in response to deadlines imposed by the Ohio General Assembly.  Today, a Franklin County Common Pleas Court issued an judgment entry today ordering ERAC to: 

1. Vacate all one hour hearings;
2. Require full and fair hearings (de novo); and
3. Declaring the Legislative imposed deadlines as non-binding

While we may now return to the status quo as it relates to the hearing process on environmental appeals, the fallout is not over. 

First, ERAC will now have to go through the process of re-scheduling hearings in hundreds of pending appeals.  The result may be a longer time frame for decisions than what would have occurred had the General Assembly never tried to impose deadlines. 

Second, Legislation is still possible.  The deadlines were imposed for a reason and business groups may try to re-craft deadlines in a more constructive manner.  The Court found the deadlines non-binding because no ramification was imposed on ERAC if it missed the deadline.  Some may see that as a road map to creating effective deadlines. 

My hope is that all of this will bring about positive change in terms of increased funding for ERAC.  Most see that as the real answer.  Now we just have to find the money, which may be no easy task.

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The latest developments in the saga involving current hearing process in the Ohio Environmental Review Appeals Commission (ERAC) shows chaos rains for the hundreds of appeals pending before the Commission.  As previously covered on this blog (see, A Dozen Companies File Constitutional Challenges to 1-hour Hearings), in response to legislative deadlines imposed on the Commission, ERAC has scheduled or has proposed to schedule 1-hour hearings with no discovery on ALL pending appeals.

Businesses as well as environmental groups were very concerned with ERAC's approach.  The first legal challenge to be filed sought a writ of mandamus from the 10th Appellate Court to compel ERAC to provide for full blown hearings (de novo hearings).  The State, attorneys for ERAC and the attorneys for the 13 companies negotiated an uncontested motion for the writ.  Despite the uncontested nature of the motion, the Court issued a ruling declining to issue the writ.  However, the ruling contained some non-binding language (dicta) regarding due process rights:

Indeed, the clear legal right and clear legal duty identified are uncontroversial-relators have a right to de novo hearings that comply with due process, and the Commission has the duty to provide for such.

Despite the language in the order, ERAC continued to proceed with holding 1-hour hearings.  I even heard a story of one attorney who tried to put a witness on to introduce evidence only to be cut-off after thirty minutes by the Commission telling them "your time is up." 

The attorneys representing the original 13 companies followed the Appeals Court advice and filed a declaratory judgment action in common pleas court.  Shortly after the suit was filed, the Court issued a temporary restraining order (TRO) against ERAC preventing the Commission from holding any of the 1-hour hearings in the 40 upcoming hearings involving the 13 companies.

Even after the TRO was obtained, ERAC continued to proceed with 1-hour hearings in cases that were not covered by the Order.  Chairwoman of the three-member commission, Lisa Eschleman, was quoted in the Columbus Dispatch as saying:  "ERAC is going to proceed as scheduled so that we can comply with the mandate of the General Assembly," 

Because ERAC is continuing to proceed with 1-hour hearings on appeals not involving the 40 subject to the TRO, each Appellant is being forced to go to the Court and request their own TRO. Others have elected just to proceed with 1-hour hearings probably betting that the decision will be overturned on appeal because due process was not provided.

If companies and environmental groups are both upset with the current process, why hasn't the State which represents Ohio EPA and the Ohio Department of Agriculture (among others) been vocal?  I have been told that one reason the State is not objecting to ERAC's process is that the whole mess has forced settlement of a lot of pending appeals.  Another reason for the lack of concern maybe that 1-hour hearings make it much more likely that the decision of the State Agency will be upheld due to the limitations on presenting evidence.

Hopefully, the Court will issue a decision in the declaratory judgment action that results in a permanent fix- restoring full hearings on appeals.  Until such a decision is issued, the situation involving the hundreds of appeals before the Commission remains in a state of flux. 

Meanwhile, the outcry has grown (including me) that the real solution to this problem is to fund ERAC who has a tiny budget. Only problem- where do you get the money in a State which is facing a $1 billion dollar hole in their current budget.  On Tuesday, the Columbus Dispatch issued a editorial against legislative deadlines and supporting more funding:

"Such a delay demands further explanation, but arbitrarily rationing time before the commission is unreasonable. Lawmakers should consider whether the three-person commission, which has only two additional employees, needs more help. Unlike other such boards, ERAC members conduct all their own hearings, do their own legal research and write their decisions."

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A discussed in prior posts, the Environmental Review Appeals Commission (ERAC) has taken an aggressive respond to deadlines imposed by the Ohio Legislature compelling ERAC to render decisions in 339 appeals in a matter of months.  It issued orders in all pending appeals canceling prior hearings and establishing an expedited hearing format that consists of the following:

• one hour hearings- split between the sides equally
• no presentation of witnesses
• five page briefs
• no meaningful discovery (depositions, document production, etc.)

My prior posts resulted in an interview with Gongwer regarding the ERAC deadlines and corresponding orders for expedited hearings.  In the article, Gongwer quoted ERAC Chairwoman Lisa Eschleman who said:

Limits on hearings were necessary to comply with new deadlines for ERAC to issue rulings, which were included in the biennial budget bill (HB 1).
Under the new deadlines, the commission must issue final decisions in 339 appeals by Dec. 15, she said, noting hearings were scheduled through Dec. 1.

"We took 339, divided it by the number of days, minus the number of holidays. It means we had to do six de novo hearings a day," she said. "Physically we had to put a limit on the amount of the time the people can have."

Previously, average de novo hearings at ERAC lasted about five days, she said.

The deadlines imposed in the Budget Bill were not opposed by the business community, only environmental groups sought a veto from Governor Strickland.  However, now that ERAC has responded to the deadlines with its expedited hearings, businesses are scrambling to address the issue.

A lawsuit was filed in the 10th Appellate Court on behalf of over a dozen companies with forty appeals pending before ERAC.  The lawsuit (called a Writ of Mandamus) seeks the Appellate Court to issue an order to compel ERAC to comply with due process requirements.  The suit states:

A writ is necessary because the Commission has embarked upon a process of scheduling hearings de novo in over three hundred pending appeals that limit appellants, including the Relators, to not more than one-half hour to present evidence in support of their appeals, as more fully described below. Such a patent deprivation of Relators’ right to a hearing de novo that adheres to the most basic requirements of due process can only be adequately addressed through issuance of the requested writ.

While such a lawsuit was inevitable, even if successful, it will not on its own address the other two hounded and ninety appeals that also received orders.  Nor will address the hundreds of appeals that are still pending after the initial December 15th deadline. 

Clearly, a broader fix is necessary.  While quicker decisions is an admirable goal, mandated deadlines such as this result in unanticipated consequences.  The real answer to this problem is difficult to implement in tough budget times- more money for ERAC.  The Commission is grossly understaffed and has outdated technology to handles the several hundred cases it has pending. 

Perhaps there is even the need for appointment of more Commissioners to hear all these appeals.  ERAC has three Commissioners and all three hear every appeal.  Appellate Courts have more judges than sit on any one panel for a case, why not ERAC?

Its still clear this problem will become worse without some kind of legislative fix either

• giving the money ERAC needs
• increasing its staff and/or Commissioners or
• simply removing the deadlines and tolerating longer appeals.

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The Ohio General Assembly included in the state budget a series of deadlines for issuing decisions in environmental appeals. (See prior post) The deadlines apply to the Environmental Review Appeals Commission (ERAC) which hears administrative appeals for hundreds of Ohio EPA and other state Agency actions.  Here are the deadlines imposed on ERAC:

The commission (ERAC) shall issue a written order affirming, vacating, or modifying an action pursuant to the following schedule:

(1) For an appeal that was filed with the commission before April 15, 2008, the commission shall issue a written order not later than December 15, 2009.

(2) For all other appeals that have been filed with the commission as of October 15, 2009, the commission shall issue a written order not later than July 15, 2010.

(3) For an appeal that is filed with the commission after October 15, 2009, the commission shall issue a written order not later than twelve months after the filing of the appeal with the commission.

ERAC has responded in a forceful way to the imposed deadlines.  It has been issuing orders for numerous pending appeals that restructure the normal hearing process.  Typical hearings included discovery, motions and multi-day hearings followed by briefs.  In response to the imposed deadlines ERAC has cut out all discovery, limited hearings to one hour and will accept only five page briefs.  (Here is an example ERAC order on one of the many appeals facing the deadline)

For many complicated environmental cases heard by ERAC it is impossible to present the issues in a coherent and supported manner under this structure.  Based upon the limited amount of information provided to ERAC under this structure suggests they will mostly play it safe in rendering decisions by perhaps deferring to the Agency.

Perhaps this is an example of unintended consequences, but it seems almost certain that this will not be the end of the story.  Additional legislative action to tweak or change the budget language almost seems a certainty.

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Here is a quick update on some of the important changes that were or were not included in the Ohio Budget (H.B. 1) that impact environmentally related issues and Ohio EPA's budget:

ERAC Deadlines-   As discussed in my previous post, the Ohio Budget included mandatory deadlines placed on ERAC for making determinations on appeals filed before the Commission.  Environmental groups wrote a strong letter to the Governor requesting a veto the ERAC deadlines.  The Governor did not veto the provision, however it appears likely the language will be tinkered with in the Budget Corrections Bill. 

Extension of Deadline for Construction after Issuance of Air PTI:  All air permits for construction and installation of new sources in the State of Ohio include a requirement that the permit expires after eighteen (18) months if construction of the source has not been completed.  An appeal of an air PTI can complicate financing efforts for projects.  Banks may not provide financing while an appeal is pending.  To address this and other issues associated with the construction deadline, the Budget Bill included new language that allows extension of that deadline for any of the following reasons (copy of amendment for exact language):

• Owner has undertaken a continuing program of installation or modification during the eighteen-month period
• Owner entered a binding contract for construction of the source within the eighteen month period
• Director of Ohio EPA issues an extension
• The air PTI is the subject of an appeal by a third party receives an automatic extension based upon the number of days the permit was under appeal
• Original permit is superseded by a subsequent air PTI

$1.25 increase in Solid Waste Tipping Fee to fund Ohio EPA:  The municipal solid waste tipping fee was increased by $1.25 a ton which raises the total fee from $3.50 a ton to $4.75 a ton. Of the increase, .25 goes to ODNR for the Soil and Water Conservation Districts. The remaining $1.00 will go to Ohio EPA to support its programs.  

The tipping fee increase was included, in part, to address a reduction in the amount of solid waste going into Ohio's landfills.  As the fee continues to increase, businesses will have a greater incentive to look for alternative ways to dispose of industrial waste other than sending it to a solid waste landfill.  One such option is beneficial use of the material.  Ohio EPA has yet to to release its second draft of the beneficial use rules, however, as costs of disposal increase interest in this option will rise.

Spending Authority Caps:  While the Legislature agreed to restore the $1.25 increase in tipping fees, it failed to remove the spending caps that were placed on Ohio EPA fee accounts in the Senate.  The practical ramification is that even though the accounts have fee revenue, Ohio EPA will be prevented from spending the revenue to support its staff and programs.  Ohio EPA intends to seek removal of the spending authority caps through the Controlling Board.  If Ohio EPA gets support from business groups it appears likely the caps will be removed and possibility of dramatic staff reductions appears unlikely.

Rejection of the Expansion of Renewable Energy Projects-  Ohio has one of the broadest definitions for what qualifies as "renewable energy source" for purposes of meeting the State's Renewable Portfolio Standard (RPS).  Efforts were rejected to expand the definition to include burning of solid waste.

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Buried in the thousand pages of the Ohio Budget Bill (H.B. 1) is an amendment that could have a major impact on hundreds of pending and future appeals of environmental decisions.  The budget bill amendment includes language placing strict deadlines for issuing decisions on environmental appeals. The deadlines could impact some very controversial permit appeals, including the Natural Resource Defense Council (NRDC) appeal of AMP Ohio's air permit for its new baseload coal-fired power plant.

By law the Environmental Review Appeals Commission (ERAC) hears and issues decisions on a multitude of actions by Ohio EPA as well as a limited number of actions by other state agencies.  The appeals heard by ERAC include:

• Ohio EPA rules
• Ohio EPA enforcement orders
• Ohio EPA permitting decisions in air, water, solid waste, hazardous waste, etc.
• Actions by the Boards of Health related to solid waste facilities
• Ohio EPA decision related to the Voluntary Action Program (brownfields)
• Orders of the State Fire Marshall relative to underground storage tanks (BUSTR)
• Water permits and orders issued by Ohio Department of Agriculture for large factory farms

At any given time ERAC will typically have hundreds of appeals pending.  Some appeals can sit before ERAC for years, but this is typically by mutual consent of the parties in the appeal.   However, its not uncommon  in complex cases for hearings to be scheduled 18 to 24 months after appeal has been filed. 

Obviously someone felt concerned that ERAC was taking too long in issuing the majority of its decisions because the Ohio Budget Bill included strict deadlines for making determinations.  Here is the language (click here for the actual H.B. 1 Budget amendment):

The commission (ERAC) shall issue a written order affirming, vacating, or modifying an action pursuant to the following schedule:

(1) For an appeal that was filed with the commission before April 15, 2008, the commission shall issue a written order not later than December 15, 2009.

(2) For all other appeals that have been filed with the commission as of October 15, 2009, the commission shall issue a written order not later than July 15, 2010.

(3) For an appeal that is filed with the commission after October 15, 2009, the commission shall issue a written order not later than twelve months after the filing of the appeal with the commission. 

The language is silent on what happens if ERAC fails to adhere to the deadlines.  If left as is the language could create a right to file an action against ERAC to compel it to issue a decision (called a mandamus action). 

I am told that the legislative intent of the language was to remove the appeal from ERAC's jurisdiction and allow the Court of Appeals to hear the appeal.  If that was indeed the intent it would appear to be unworkable given the Court of Appeals doesn't accept testimony of witnesses.   In addition, there would be no assurance a Court, with its very busy docket, would make a determination any quicker.

Regardless, the new deadlines could have a significant impact.  With so many appeals pending before ERAC, the Commission may be forced to shorten hearings, reduce discovery or take other steps to speed up the decision making process.  It is also possible the deadlines could influence ERAC's level of scrutiny of Agency actions.

Indeed, the language could impact some very controversial actions currently under appeal, including the NRDC appeal of the AMP Ohio air permit on multiple grounds including regulation of greenhouse gases. According to ERAC's docket, a hearing is scheduled to begin March 8, 2010. The original appeal was filed in early spring of 2008. Under the imposed deadlines a decision would have to be issued no later than December 15, 2009.

It is possible that the Legislature will used the Budget Correction Bill to amend the language. Given the fact that the public hasn't had an opportunity to see it or provide input we may yet see substantial revisions. 

(Photo: wallyg/everystockphoto.com)

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Its not often you see business associations support budget requests by State agencies, especially when its Ohio EPA.  However, as a result of Senate actions with would cap Ohio EPA's spending authority business groups have sent a strong letter of support to the Ohio Legislature requesting the caps be removed. (Ohio Chamber and Ohio Manufacturer's Letter Re: Ohio EPA's Budget).

When Ohio EPA introduced their budget proposal they requested an increase in solid waste and construction & demolition debris tipping fees in order to maintain the current staff.  Under the proposal municipal waste dumping fees would go from $4.75 per ton from the current $3.50 per ton.  C&D fees would have seen the largest jump, going from $1.70 per ton to $4.40 per ton.Ohio EPA argued the fee increases were necessary to offset increasing costs to maintain as well as adjust for a decline in the amount of waste being disposed in Ohio's landfills. 

The fees became lost in a sea of other fee increase proposed by Governor Ted Strickland designed to help balance Ohio's beleaguered budget.  More so than in budget battles past, the fees were likened to tax increases and many (including Ohio EPA's request) were stripped from the budget.

In a recent Springfield News-Sun article, State Sen. Keith Faber, R-Celina, articulated "fees are hidden taxes" argument.  Here is his quote from the article:

“The EPA is a fee-based entity. They should have to tighten their belts like everybody else. Not just ask for more fees,” Faber said.

Ohio EPA requested that the Legislature restore their spending authority and re-establish the $1.00 fee increase in municipal solid waste fees.  Now this issue will play out in a contentious Conference Committee this weekend.  The Business Group's letter strongly supports the restoration of spending authority, but is silent on any fee increase. 

However, the Senate went one dramatic step beyond stripping out proposed fee increases, it placed a cap on allowable expenditures from existing fees.  In other words, Ohio EPA would be prohibited above the cap from spending money it had already collected from existing fees.

In response, Ohio EPA issued an analysis that if the fees remain out and the caps in place it would be forced to eliminate 200 positions (cut or not fill vacant positions).  Understanding the budget debate needed to be linked to Ohio's ailing economy, the Agency said many of the eliminated positions would likely be in permitting sections which could slow down economic development in the State. Here is the analysis provided by Ohio EPA of the potential staff cuts. 

Division of Air Pollution Control Staff Cuts

Division of Surface Water Staff Cuts

Unfortunately, this issue is a relatively small issue in terms of the $2.4 billion dollar budget gap that the Conference Committee must fill.  Governor Strickland recently proposed very controversial spending cuts to many State programs.  How Ohio EPA will fair in this type of difficult budget climate remains to be seen. 

Ohio EPA is my former employer and I still have the scars from past budget battles.  From my time at the Agency I am a strong believer in the fact the Agency needs to maintain staff to keep up with an ever increasing workload. A workload that many outside the Agency walls don't see or don't fully appreciate. I am crossing my fingers that the Legislature will devote a small amount of time to resolve this issue and will do the right thing.

(Photo: J.Stephen Conn/flickr)

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I have been following discussion regarding the green elements of the Presidents Stimulus Package, known as the American Recovery and Reinvestment Act of 2009.  There is certainly a lot directed toward environmentally related projects, especially renewable energy development.  Leading some to call these provisions the "Green New Deal." 

What is the real story behind some of the spending that has been reported?  You certainly can find information all across the web and on government sites that simply lists the amount of money in the bill and which program it has been directed.  However, detail about what the money will really be used for can be hard to find.

Bottom line, some provisions are better than others.  For instance, much of the money directed toward U.S. EPA will pay for existing projects.  This includes prior grant applications, clean ups already under contract or projects previously selected for funding.  So, for many of you expecting great new opportunities for EPA related projects, I don't think the bill offers you that much. (with the exception of diesel engine related grants- see below).

The renewable energy side of the equation is a totally different story.  There are continued and new tax incentives as well as new grant opportunities.  There is a lot in the bill and it will literally pay to stay on top of what is available. 

I.  EPA Side- the American Recovery and Reinvestment Act of 2009 specifically includes $7.22 billion for projects and programs administered by EPA. 

Below is a description of the major areas of funding as well as an analysis of whether this funding presents new opportunities. EPA has established a web site page with helpful links that discuss the opportunities in the Stimulus Bill relative to the money designated for EPA.

Brownfields:  There is over $100 million directed to U.S. EPA's brownfield redevelopment program.  I was intrigued regarding this new slug of money for it could present another great opportunity for clients outside of the Clean Ohio program.  However, after asking for more details from U.S. EPA, I learned that this money is basically already spent.  The U.S. EPA intends to use it for projects that requested funding back in 2008 but were not funded due to an over abundance of proposals.  While its good news more projects are getting funded, I believe U.S. EPA could have even received better project proposals if they would have allowed for new applications. 

Diesel Emission Retrofits Act (DERA):  The Stimulus directed over $300 million in new money to fund the DERA program. DERA is the federal grant program that pays for diesel engine retrofits, repowers and replacements.  Last years allocation was only $50 million for the entire country.  So the Stimulus does provide real, new money for this program.  U.S. EPA intends to spend the money quickly so watch U.S. EPA's website and Recovery.gov to jump in with your project.

Underground Storage Tank (USTs) Cleanups: $200 million was provided to U.S. EPA's Leaking Underground Storage Tanks (LUST) Program, EPA provides resources to states and territories for the oversight, enforcement and cleanup of petroleum releases from underground storage tanks (USTs). EPA estimates that every year 7,570 new releases occur which just adds to the sites that have not yet been completed.  There could be as many as 116,000 sites requiring clean up actions in 2009. However, it appears the funding will be used to help pay for clean ups of abandoned tanks rather than create a new grant program.  Here is additional detail from the from the Convenience Store News regarding the Stimulus package:

Other measures relevant to c-stores include a final approval of $200 million for the Leaking Underground Storage Tank (LUST) Trust Fund, which assists in the cleanup of abandoned gas stations, but will not pay for inspections or to assist state reimbursements programs.

Superfund Cleanups: $600 million was provided to U.S. EPA's superfund program.  However, these funds will be obligated mostly through existing contracts and Interagency Agreements.  In 2009 there could be as many as 20 Superfund sites ready for construction, but not funded due to budget shortfalls. The Recovery funds will begin to address those sites, plus accelerate construction at many of 600 sites where work has been limited in the past by funding constraints.

Clean Water State Revolving Fund and Drinking Water State Revolving Fund: $4 billion for assistance to help communities with water quality and wastewater infrastructure needs and $2 billion for drinking water infrastructure needs. A portion of the funding will be targeted toward green infrastructure, water and energy efficiency and environmentally innovative projects. (guidance on the green infrastructure component)

Ohio EPA has begun soliciting projects for its Drinking Water and Wastewater Revolving Loan Programs.  However, projects must already have been planned and reviewed by Ohio EPA for inclusion on project planning lists.  For instance, drinking water projects must be on the Drinking Water Project Priority List (PPL).

II.  Renewable Energy- the American Recovery and Reinvestment Act of 2009 bill is anticipated to provide around $43 billion for renewable energy in the form of tax breaks and other incentives

The extended entry includes a summary of the renewable energy incentives and investment as assembled by the American Council on Renewable Energy (ACORE). (the link provides you a hard copy of the ACORE document- which does a great job of assembling the relevant information for renewable energy incentives- or see the extended entry for a summary).

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