Two Trump Administration Environmental Priorities to Help the "Rust Belt"

There is a lot of hyperbole regarding President-Elect Trump's potential environmental agenda. During the campaign there was also a lot made about issues of employment and opportunity in the "Rust Belt" (a term I personally do no like).  Here are two suggestions of how the incoming Trump Administration could bring greater opportunity to the Rust Belt without controversial roll backs of environmental standards.   

  1. Bring Logic to Air Quality Standards and Regulations
  2. Moonshot on Brownfield Redevelopment

Bring Logic to Air Quality Standards and Regulations 

Midwestern states with large populations and a heavy manufacturing base are hit particularly hard by tightening air quality standards for ozone and small particulate matter (p.m. 2.5).  On October 1, 2015, EPA strengthened the National Ambient Air Quality Standards (NAAQS) for ground-level ozone to 70 parts per billion (ppb).  EPA will designate areas in late 2017 based on monitoring data as to whether they meet the ozone standard ("Attainment Areas") or do not meet the standard ("Non-Attainment Areas"). States will have until at least 2020 to achieve compliance with the revised standards. 

As the adjacent map demonstrates, Wisconsin, Michigan, Ohio and Pennsylvania (all key states to Trump's victory) will have significant portions of the state designated as non-attainment areas.  The designations will result in more regulation and restrictions on economic growth.

The good news is that U.S. EPA projects that most areas will be able to reach attainment of the new standards as a result of already promulgated federal regulations for gasoline, autos, power plants, and other sources of emissions. U.S. EPA projects that these already promulgated regulations will bring all but 14 of the 241 counties that currently don't meet the 70 ppb ozone standard into attainment.  However, the bad news is that these reductions will not be achieved until 2025, five years past the ozone deadline.  Furthermore, some Members of Congress are trying to block the federal regulations.

As discussed in a recent Congressional Research Service report on the new ozone standard, some while Members in Congress have objected to the federal standards for motor vehicles, fuels, power plants, and other sources.  However, the net effect of repealing them would be to shift the burden of attaining the ozone NAAQS more squarely in the direction of state and local governments. As detailed in prior posts (here and here), the states have very little ability to improve air quality through state specific regulations under required emission reduction plans (State Implementation Plans- SIPs) to meet the NAAQS.  The federal regulations are far more cost effective.

It's not just new regulations that will hamper economic growth in non-attainment areas, it is also mandated restrictions on economic growth.  Under the Clear Air Act, businesses looking to expand or relocate must pay for more costly emission controls in non-attainment areas.  Also, in non-attainment areas any increase in air emissions associated with a business expansion must be offset by reductions from existing businesses before a permit can be issued that allows the expansion to go forward (i.e. "Offsets").  These requirements push businesses to avoid non-attainment areas reducing opportunities for economic expansion.  

A Trump Administration could bring more logic to this regulatory mish mash by resisting calls to roll back the more cost effective federal regulations and by adjusting attainment deadlines to give states more time to take full advantage of federal regulations already on the books. Such actions would also avoid promulgation of costly new local air regulations that will largely do very little to improve air quality.  

Moonshot on Brownfield Redevelopment

A major focus during the campaign was how to improve our urban centers- finding ways to attract development and jobs to our neglected cities.  A highly effective means of giving a boost to our inner cities would be to energize U.S. EPA's brownfield program as well as other brownfield incentives. 

As detailed in a four part series on this blog, brownfields lead to significant decay, social injustice and loss of opportunity (i.e. jobs).  The cost for businesses to expand in our urban centers is often complicated by the cost to cleanup pre-existing contamination.  Those costs are avoided by moving out of the City and developing on greenfields instead.

While brownfield programs have been successful, they have been wholly inadequate to make a significant difference.  If part of the Trump Administration's massive infrastructure program was directed toward brownfield redevelopment, this could be a major shot in the arm promoting capital investment, cleaning up sites that pose public health issues and creating more jobs for those living in the inner city.  

U.S. EPA Proposes to Designate Additional Ohio Counties as Non-Attainment with New Fine Particle Standard

Back on December 14, 2012, EPA strengthened the National Ambient Air Quality Standard (NAAQS) for fine particle pollution.  The standard was strengthened from 15.0 micrograms per cubic meter (ug/m3) to 12.0 ug/m3.  

Under the Clean Air Act, EPA first asks States to propose which counties should be deemed as not meeting the standard (i.e. "Nonattainment") based upon air quality monitoring data it complied over the last three years.  

On December 13, 2013, Ohio EPA proposed five counties- Cuyahoga, Stark, Hamilton, Clermont and Butler be designated nonattainment.  On August 19, 2014, U.S. EPA issued its response indicating that it intended to increase the number of counties designated nonattainment to 8 full counties and 5 partial counties. 

Ohio Recommended Nonattainment Areas and U.S. EPA's Intended Designated Nonattainment Areas for the 2012 annual PM 2.5 NAAQS
Area Ohio's Recommendations

U.S. EPA Intended Designated Nonattainment Areas

Canton-Massillon Stark Stark, Summit, Wayne (Partial)
Cleveland Cuyahoga Cuyahoga, Lake and Lorain
Cincinnati-Hamilton, OH-KY Butler, Clermont and Hamilton

OH: Butler, Clermont, Hamilton, Warren (partial)

KY: Boone (partial), Campbell (partial) and Kenton (partial)

What implications do these designations have on Ohio?

Ohio will have to develop a State Implementation Plan (SIP) which demonstrates how the State will bring these counties into attainment with the new PM 2.5 standard.  The SIP will contain new air pollution control regulations.  This means increased air pollution regulations in these areas for existing business.

In addition, once the nonattainment classifications are finalized (likely in December 2014), air permitting will become more challenging in these nonattainment areas.  New Source Review requirements will require larger sources to offset any pollution increases before a permit can be issued.  Offset means either finding other businesses willing to reduce emissions or take emission credits for facilities that recently shut down.

The new requirements could slow down permitting for larger factories in these areas.  Also, the net result can be to make nonattainment areas less competitive in attracting new manufacturing jobs.

Ohio Finalizes Emission Trading Bank for Offsets

Ohio EPA wants to make it easier for economic development to occur in areas like Cleveland, which are designated "non-attainment" with the federal air quality standards (NAAQS) such as ozone or PM 2.5.   Federal regulations require companies looking to build or expand in these areas to offset their emissions.  Offset is achieved by securing the requisite emission reducition credits from existing companies in the non-attainment area. 

In the past a company had no idea whether sufficient eligible emission reductions had occurred that would allow them to fully offset their emission increases.  Available emission reduction credits was not public information.  This lack of information may have dissuaded companies from considering non-attainment areas for expansion.  This hurts areas like Cleveland which is non-attainment for both ozone and P.M. 2.5.

Ohio EPA will now be establishing a state-wide emission trading bank to help facilitate communication between companies that hold emission trading credits and those that need to purchase the credits to build or expand.  The emission trading bank is in reality a web site that will list the available credits by non-attainment area and pollutant.  It's kind of like a giant advertising billboard for companies holding credits they want to sell.  As further explained below, credits will be listed in the bank as either "verified" or "unverified." 

Ohio EPA has finalized the rules that will govern the emission trading bank, known as the emission reduction credits (ERC) rules.  See,OAC Chapter 3745-111. The rules will become effective on January 8, 2009.  

Basic Overview of Offset Requirement: Under U.S. EPA's New Source Review (NSR) program a company looking to build or expand a facility in a non-attainment area may be required to offset its air emissions before receiving a permit (Permit to Install and Operate- PTIO) to construct the facility from Ohio EPA.  Only new or expanded facilities that are "major" sources need offset their emission.  Generally, a "major" source is a source that will emit over 100 tons of the non-attainment related pollutant or 40 tons if it is an expansion of an existing source.  However, these thresholds vary depending upon the pollutant and how the severity of the non-attainment designation.

Ohio EPA's ERC Program is Voluntary:  There is no requirement to participate in Ohio EPA's emission trading bank.  The ERC rules only apply to those who elect to list their emission credits on Ohio EPA's website.  Private transactions between companies outside of the Ohio EPA's emission trading bank is still permissible.

ERC Program Will List Verified and Unverified Credits:  A company who holds ERC's may elect to have them reviewed and certified by Ohio EPA before listing them.  If Ohio EPA validates the credits they will be considered "verified" and will be listed as such on the web site.  The company will be issued a ERC certificate with a unique number for tracking purposes.

Verified credits have advantages- 1) a buyer should not have to worry as to whether the credits are valid once they turn them in to get their NSR permit; and 2) the permitting process for a new source offsetting its emissions will be faster if it uses verified credits.  For sellers of credits, the disadvantage to verified credits its the administrative costs associated with completing the process. 

Unverified credits can be included in the bank.  However, Ohio EPA's rules will not allow for the transfer of unverified credits.  A company would either have to withdraw the credits and transfer them outside the bank or go through the verification process.

What Types of Activities Generate Credits?  Other states (Pennsylvania, Michigan and New Jersey) have operated banks for a long time with a mixed degree of success.  Studies have shown that 80% of all ERC credits in other states were generated as a result of facility shut downs.  However, ERCs can be generated by installing new pollution control equipment, a change in process or reduced hours if they meet the regulatory requirements (quantifiable, reliable, enforceable and replicable).  Stationary and mobile source reductions can both result in ERCs.

What Should You Consider if You Are a Buyer or Seller of Credits? 

  1. Verified credits should be worth more- Verified credits should command a higher price.  They have already been certified by Ohio EPA and therefore carry far less risk than unverified credits.
  2. Transfer contracts should allocate risk-  All transfers of credits should be governed by well developed contracts that address the issues associated with the particular transaction.  For instance, are the credits sold "as is" or does the contract contain guarantees as to their validity.  When will payment be made?  What happens if the credits are invalidated?
  3. Assess the market-  Whether you are a buyer or seller you should assess the market before making decisions.  What types of credits are available?  How many credits are available?  If you are a buyer, make preliminary inquiries as to price to determine the viability of completing the project.

Are There ERCs in Ohio Right Now?  Ohio EPA has not established the website.  Now that the ERC rules are finalized, Ohio EPA can start to promote the bank.  Hopefully, this will lead to an expansion in the number of credits available.  Based upon limited information from Ohio EPA companies have submitted potential credits for consideration.  Submissions so far include the following types of credits in the locations specified:

Generated in Scioto County
17.75 tons of PM 2.5 ERCs
26.62 tons of SO2 ERCs
14.51 tons of NOx ERCs


Generated in Portage County
57.91 tons of VOC ERCs


Generated in Hamilton County
45.60 tons of VOC ERCs