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

On May 26th, the Ohio Department of Development announced the recipients of the second round of the Diesel Emission Reduction Grant (DERG) program.  The announcement once again highlights issues with implementation of this grant program. 

After two grant rounds, school buses, transit and rail received the lion share of the total $19.8 million in available funding under this program.  There are issues with this allocation:

• School buses already have available funding through Ohio EPA Clean Diesel School Bus Fund
• Transit has received $203 million in stimulus money
• Rail projects are very costly- the project funded in the two DERG rounds took up nearly 1/2 of the available funding

In concept, the DERG program selects projects based upon cost effectiveness.  This should mean money is directed toward projects that will result in the biggest reductions at the lowest cost. According to U.S. EPA data, the transit sector in Ohio accounts for only 2% of diesel emissions. Other sectors eligible under DERG, such as construction equipment and heavy duty trucks, account for nearly 50% of the diesel emissions.

Yet after two DERG rounds, only 8 pieces of construction equipment and/or heavy duty trucks will be repowered/replaced/retrofitted. 

While I can quibble with how successful DERG has been at targeting sectors for reductions, it is still is a very good program that has resulted in substantial reductions. As detailed in previous posts, DERG is also good for Ohio's economy by promoting voluntary emission reductions that reduces air pollution costs for businesses.   Unfortunately, the Transportation Bill (H.B. 2) cut DERG's funding by 80% (see discussion at the end of this post).

Let's hope the State Legislature doesn't give up on a very worthwhile program.

From' the ODOD DERG press release here is the list of recipients in the second round:

• City of Dublin, in partnership with City of Westerville - Replacing eight model year
1999/2000 short haul diesel trucks.
• Columbus City Schools - Replacing 15 model year 1990 school buses with new school buses.
• CSX Transportation, Inc. - Repowering four Switcher Locomotives with GENSET diesel
engines.
• Great Lakes Construction - Repowering two model year 1987/1988 track type bulldozers.
• Industrial Railway Switching & Services - Retrofitting three switcher locomotives with the
private vendor's "Lean and Green Locomotive Package" technology to reduce overall vehicle
emissions.
• John R. Jurgensen - Replacing two track type bulldozers and four hydraulic excavators with
new vehicles.
• Kenston Local School District - Replacing one model year 1998 school bus with a new plugin
hybrid school bus.
• Manchester Local School District - Replacing one model year 1991 school bus with a new
plug-in hybrid school bus.
• Osnaburg Local Schools, in partnership with Massillon Local Schools and North Canton
Local Schools – Retrofitting six school buses with DPF/CCFS applications and replacing three
school buses with new model year buses.
• Portage County Solid Waste Management District - Replacing one model year 1999 diesel
truck used for the collection of recyclables.
• Ross Local School District - Replacing five model year 1988/1990/1991 school buses with
new buses.
• Southwest Ohio Regional Transit Authority - Repowering 50 model year 2001/2002 public
transit buses.
• Stark County Commissioners, in partnership with Stark County Board of Mental
Retardation and Developmental Disabilities - Replacing seven model year 1993/1995 school
buses with new model year buses.
• Toledo-Lucas County Port Authority - Replacing an existing diesel generator set on port
facility gantry crane.
• Wood County Commissioners, in partnership with Wood County Board of Mental
Retardation and Developmental Disabilities - Replacing five model year 1998/2001/2002
diesel powered school buses with new liquid propane- injected (LPI) engines
• Wood County Engineer’s Office – Replacing two model year 1990/1996 diesel powered dump
trucks with new trucks

Update on DERG Funding

In the last State budget, Ohio set aside $20 million over two years from federal transportation dollars known as Congestion Mitigation and Air Quality (CMAQ) program.  Federal legislation made clear that diesel emission reduction projects were not only acceptable they should be a priority.

After the last budget, Ohio had the largest dedicated diesel fund in the entire Midwest.  Ohio received awards for the DERG program.  The Ohio Diesel Coalition sought to renew the DERG program for another two years at the same level of funding.  Ultimately. H.B. 2 included only $5 million in funding for DERG over the next two fiscal years.  This is a $15 million dollar reduction from the past two years. 

Meanwhile, $15 million has been set aside for public transportation, which has already received, according to the Plain Dealer, nearly $203 million in stimulus funding. 

While DERG has had its issues starting up, most new government programs do.  There certainly is enough demand for the program.  Unfortunately, DERG funding has been reduced by 80%.  This reduction comes at a time when only a few small scale construction equipment projects have received funding.  Ohio has not even scratched the surface of possible reductions from this sector, by far the largest source of diesel emissions.  Now is not the time to be reducing funding for this program.

(Photo: terinea/everystockphoto.com)

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The American Reinvestment and Recovery Act (ARRA) contains the highest federal funding yet for the 5 r's of diesel- retrofits, replacements, repowers, replace and refuel.  The competitive announcements for the ARRA Funding for National Diesel Emissions Reduction Program became available on March 20, 2009. Better get your act together if you still want an application in- the deadline is April 28th to submit a request for funding.  If you can't make the deadline there will be normal funding available ($60 million) in the fall. 

Who can file the application?

1. Regional, state, local, tribal or port agency with jurisdiction over transportation or air quality; and
2. Nonprofit organization or institution which:

a) Represents or provides pollution reduction or educational services to persons or organizations that operate diesel fleets; or

b)Has, as its principle purpose, the promotion of transportation or air quality

What will it pay for?

• 75% for engine repowers
• 25% for all replacements except
• 50% for school buses that meet 2010 standards
• 100% for retrofit technologies
• 100% for idle reduction technologies
• 100% for engine upgrades (kits only)
• 100% for incremental cost of cleaner fuels

Much more information is available on U.S. EPA's Region 5's web page.  Just page down to the section on ARRA. 

Helpful information and tips are available from the Diesel Technology Forum.  For example, here is some very helpful advice on addressing one of the more perplexing components of filing a DERA application- calculating jobs retained or created.

How to Calculate Job Creation - Follow the Flow. Finally, the issue which appears to be causing the most apprehension among applicants is the need to demonstrate how a project will preserve or create new jobs. The sheer range of retrofit options (remember the 5 Rs of retrofit: retrofit, rebuild, repower, replace and refuel?) as well as the varying locations and productivity of individual equipment manufacturing facilities make it very challenging to offer solid figures of new jobs added. But don’t despair. Everyone is in the same situation, so applicants are advised to focus on writing a credible, well-reasoned narrative which highlights the general labor/job impacts along every step of the project flow.

For example: project manager oversees grant award, progress, reporting; device manufacturers produce XXX new devices for the grant (incremental increases in manufacturing, packaging, processing, shipping jobs affected); equipment dealer schedules service to install devices (estimated XXX man-hours for mechanics, helpers and administrative); and so on, specific to your project. If you are not installing equipment yourself, you can ask the equipment manufacturer who has helped assess the fleet to provide an estimate of time necessary to conduct the type of installation you’re seeking. A formula which seeks to quantify jobs through use of a multiplier building on study by Keybridge Research is also available at www.meca.org.
 

UPDATE ON OHIO'S DIESEL EMISSION REDUCTION GRANT PROGRAM (DERG)

At $20 million over two years, Ohio had the largest dedicated diesel fund in the entire Midwest.  Ohio received awards for the DERG program.  Round 2 of funding was just completed and the State will be passing out nearly $11 million in funding.  Seemed like a program well worth continuing...

The Diesel Coalition sought to renew the DERG program for another two years at the same level of funding.  Ultimately. H.B. 2 included only $5 million in funding for DERG over the next two fiscal years.  This is a $15 million dollar reduction from the past two years.  While the Legislature included the full $20 million in funding, the Governor issued a line item veto of the funding (see below).

The Ohio Diesel Coalition still intends to request $20 million in funding for DERG in the regular budget bill.  The Coalition, of which I am a member, will be asking that the $15 million designated for the Public Transportation Green Fleets Program in H.B. 2 to be consolidated with DERG. 

Green Fleets are eligible for funding under DERG.  The Coalition believes it would be better to create a single competitive grant program and allow the best and most effective projects to get funding.  Hopefully we can restore funding for this very successful and worthwhile program.

Governor's Veto message in H.B. 2:

SECTION 512.43.

This provision establishes a diesel emission reduction grant program using federal Congestion Mitigation and Air Quality funds from the Federal Highway Administration.

This provision would have a negative impact on the Department of Transportation’s operations because it diverts a large portion of available flexible funding to specific purposes.

I have directed the Department to dedicate $5 million toward a diesel emissions reduction program for purposes consistent with the intent of the legislation. This funding will provide assistance to small businesses and disadvantaged business enterprises. Therefore, this veto is in the public interest.
 

(Photo: terinea/everystockphoto.com) 

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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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