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

Typically, environmental legislation may be passed in Ohio once every few years.   In fact, most environmental regulatory reform is done in small doses during the budget bill process.  In the last two weeks, Governor Kasich has signed into law three separate bills that including major environmental regulatory provisions. 

• S.B. 315- Establishes new regulations for oil & gas drilling, including provisions regarding fracking;
• S.B. 294- Contained a series of legislative overhauls to laws administered by Ohio EPA including: wetlands, solid waste, and underground storage tanks
• H.B. 473- Implemented Ohio's Water Withdrawal Regulatory Program under the Great Lakes Compact

Below are some of the major highlights from each piece of legislation. 

H.B. 473- Ohio's Implementation of the Great Lakes Compact

The Great Lakes Compact required each State to pass implementation legislation to set up regulations governing withdrawls and diversions from the Great Lakes.  Under the Compact, the Great Lake States were given wide discretion for deciding when a permit would be needed and the criteria for issuance of a water withdrawal permit. Now that H.B. 473 has passed, for the first time Ohio, businesses may need to get a permit before withdrawing water from Lake Erie or its tributaries.

Last summer, Governor Kasich vetoed Ohio's first attempt at passage of the Compact implementation legislation- H.B. 231.   The bill was sharply criticized as being too business friendly. 

This time Governor Kasich signed the legislation after certain aspects of the water withdrawal permitting program were made more stringent. (See Prior Post) Here are the most notable changes from H.B. 231:

• Withdrawal Triggers-  The thresholds for triggering a permit were significantly lowered.  Any withdrawal of the following size will trigger a permit: 
  • 2.5 million gallons per day (MGD) from Lake Erie or a recognized navigation channel;
  • 1 MGD from a river or ground water
  • 100,000 gallons from designated high quality streams
• Adverse Impact-  If you trigger a permit, ODNR can't grant a permit if it determines the withdrawal will have an "adverse impact" on Lake Erie.  H.B. 231 defined adverse impact in the negative- any withdrawal from the Lake less than 90 mgd was presumed to cause no impacts.  This proved highly controversial and was jettisoned in H.B. 473.  Rather than try and define adverse impacts in the legislation, H.B. 473 simply defers to ODNR to define the term through rulemaking. 

In one significant way H.B. 231 and H.B. 473 are very similar.  Only impacts to Lake Erie are to be considered in determining whether a withdraw would have an adverse impact.  Impacts to the receiving stream itself are not evaluated, except possibly with high quality streams.  In the end, Ohio's program is still, in essence, a Lake Erie and not a stream protection program.

S.B. 294- Ohio EPA Omnibus Regulatory Reform Bill

S.B. 294 was dubbed the Ohio EPA regulatory reform bill by the Administration.  While it does contain some significant changes to certain Ohio EPA programs, the regulatory reform could hardly be described as controversial. 

Most of the changes tweak certain administrative aspects of Ohio EPA's programs. While it is true the legislation does not contain any major substantive regulatory reforms, there are some much needed reforms in the bill, including the following:

• OCAPP Confidentiality- The Office of Compliance Assistance and Pollution Prevention is housed within Ohio EPA.  The Office serves as a free compliance assistance resource to businesses.  One historical impediment to use of OCAPP has been related to confidentiality.  Previously, Ohio law only protected as confidential inquiries related to air pollution compliance.  S.B. 294 changes this and provides confidentiality protection to all inquiries made to OCAPP regardless of subject matter (hazardous waste, solid waste, wetland permitting, surface water, and drinking water). 
• Underground Storage Tanks-  S.B. 294 addresses a longstanding issue with regulatory overlap pertaining to clean up of underground storage tanks.  Prior to the legislative changes, a developer or business wishing to clean up their property under Ohio EPA's Voluntary Action Program (VAP) had to first deal with any underground storage tanks regulated by BUSTR.  Those portions of the property with BUSTR tanks had to be cleaned up first under BUSTR's clean up program before proceeding with the VAP.  This double regulation made no practical sense since VAP standards were designed to address this type of contamination.  S.B. 294 allows volunteers to address BUSTR USTs through the VAP thereby removing a significant hurdle that had delayed and increased costs at many brownfield and site clean ups.
• Wetland Mitigation- S.B. 294 provides Ohio EPA the authority to establish an "in-lieu fee" program for wetland mitigation.  Instead of a developer needing to create wetlands on-site or buying credits at a wetland bank to offset its wetland impacts, the developer could write a check to pay for the necessary wetland mitigation.  If the program is established it could significantly streamline the wetland permitting process.

S.B. 315- New Regulation for Oil & Gas Drilling including "Fracking"

While S.B. 315 was dubbed as an all encompassing energy bill, it is largely tilted toward one form of energy- natural gas.  The most significant provisions in the bill place new regulation on the oil & gas industry, in particular "fracking."

For over a year, renewable energy companies and advocates feared Governor Kasich would do away with Ohio's fledgling renewable energy standards (RPS).  For many, the good news regarding S.B. 315 is what the bill didn't do- overhaul Ohio's RPS.  The bill did allow waste energy recovery systems to qualify for credits towards meeting Ohio's RPS, but the main structure of Ohio's RPS was left in tact.

With regard to oil & gas drilling, S.B. 315 did put in place major new regulations, including:

• New Oil & Gas Permit Requirements-  The legislation requires more information to be submitted with permit applications.  This includes: agreements with local governments regarding road maintenance, identification of the proposed source of surface or ground water, as well as requiring water well sampling in the neighboring area prior to drilling.
• Disclosure of Chemical Used in Drilling- Upon well completion, the well owner must supply information regarding the amount of products, fluids, and substances used to facilitate drilling or stimulate the well.  However, the bill includes a broad trade secret provision that exempts covered chemicals or materials from the disclosure requirements.
• Insurance-  Requires the oil and gas well owner to obtain liability insurance in an amount not less than $5 million dollars for bodily injury or property damage.  The insurance policy must also include a "reasonable level" of coverage for environmental claims. 

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Representative Wachtmann has introduced H.B 473 which will implement Ohio's regulatory program under the Great Lakes Compact.  H.B. 473 follows last summer's veto by Governor Kasich of H.B. 231 which was criticized by environmental groups and former Governor Taft and Senator Voinovich as not protective enough of Lake Erie.

The Great Lakes Compact was passed by the Great Lake states as well as Congress. The Compact sets regional standards governing water withdrawals and diversions from the Great Lakes.  With 20% of the worlds fresh water, the Great Lake states viewed the Compact as critical to protecting their fresh water resource as pressure mounts to divert water to other regions or countries facing dwindling supplies of fresh water.

H.B. 473 certainly marks a significant departure from H.B. 231 on several important points.  The most notable changes relate to the trigger levels for needing a permit and the standard for determining when a withdrawal could have an adverse impact.

Trigger Levels for Permitting

The main criticism of H.B. 231 was that it contained permit trigger thresholds which were higher than most of the other Great Lakes States which have already passed legislation implementing the Great Lakes Compact..  

H.B. 473 significantly ratchets down the trigger thresholds for needing a water withdrawal permit. Under the bill, Ohio would have lower thresholds than Indiana and comparable to Michigan's.  It will still have higher thresholds than Pennsylvania or New York. 

However, all other states allow averaging over at least 30 day period.  The current version of H.B. 473 does not allow averaging.  This is likely to be an area of debate moving forward. 

The Compact itself allows averaging.  It seems unreasonable to trigger a permit if on one day a pump installed has the capacity to withdrawal 100,000 gpd from a high quality stream regardless of whether that capacity is actually going to be utilized.  This is particularly the case when the permit program exams impacts to Lake Erie and not the stream itself.

Definition of "Adverse Impact"

The State must deny a permit if the water withdrawal is determined to cause an "adverse impact" on Lake Erie.  H.B. 473 eliminated the controversial definition of "adverse impact" that appeared in H.B. 231.

H.B. 231 defined adverse impacts in the negative- anything at or below 90 mgd from the Lake or 45 mgd from groundwater was presumed not to cause an impact.  H.B. 473 leaves the definition up to future rulemaking by the Ohio Department of Natural Resources (ODNR).  The bill calls for a study commission which will make recommendations on a definition to the Legislature. 

Overall, H.B. 473 provides broader rulemaking authority to the ODNR.  This marks a significant departure from H.B. 231 which provided virtually no rulemaking authority.  H.B. 231 was meant to provide clarity by setting forth all the important provisions in statute leaving very little to future rulemaking.

H.B. 473 should be less controversial than H.B. 231 which was vetoed by Governor Kasich after virtually every major in Ohio paper issued editorials opposing the bill.  While certain provisions will be debated, H.B. 473 moves Ohio much closer to the other Great Lakes States in how it regulates future water withdrawals from the Great Lakes Basin.

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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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With Michigan and Pennsylvania's passage of the Compact, all of the Great Lake States have now endorsed it.  The next step is to go to Congress for ratification.   While the press has almost exclusively concentrated on the diversion aspects of the Great Lakes Compact, there are other provisions that could have important ramifications for businesses.  Ohio has yet to pass enabling legislation that will grant authority to the Ohio Department of Natural Resource to implement other important aspects of the Compact, most notably regulation of water withdraws. 

The driving force behind the Compact was to ban diversions to other States and Countries.  But the Compact also requires each of the eight states to establish a regulatory program for new or increased withdraws from the Great Lakes basin. Ohio's enabling legislation will decide critical issues such as- how much water must be withdrawn before a permit will be required?  The Compact sets a default number of 100,000 gallons per day (gpd).  Other states have established higher thresholds, such as 1,000,000 gpd.

Another critical question - what type of review is required if a business triggers the need for a withdraw permit?  The Compact contains very broad language that requires a review of impacts to the Great Lake basin from which the withdraw takes place.  However, the Compact grants the states a tremendous amount of discretion to establish the level of review associated with new withdraws.  For example, Ohio could prohibit issuance of a withdraw permit if the proposed project would result in decreased flow in a tributary of Lake Erie.  Ohio could also require a detailed review of the impacts to the ecosystem if a withdraw is allowed.

While focus has rightfully been on protecting this tremendous freshwater resource from being diverted elsewhere, there are important policy questions that still remain unanswered.  How Ohio and the other Great Lake States regulate withdraws within their states will arguably have a more direct and immediate impact on its constituents. 

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