Review of Compliance with Job Commitments in State Incentive Packages

The Attorney General's Office completed its review of compliance with job commitments the state received in exchange for various incentives.  Here is the summary of its findings:

  • Workforce Compliance Rate: 100% (49 of 49 awards in substantial compliance)
  • Grant Compliance Rate: 74.4% (29 of 39)
  • Tax Credit Compliance Rate: 62.4% (78 of 125)
  • Loan Compliance Rate: 57.1% (24 of 42)

The chart and figures show the break down of compliance by type of incentive.  The report also contains an appendix which identifies all of the specific incentive packages by company and the status of compliance.  

The report really doesn't provide much insight as to why some incentives have a greater level of compliance than others. One explanation for the 100% compliance with workforce development is that the commitment is really just a training commitment, not a job creation commitment.

The state not only reviews compliance with the job commitments in state incentive agreements, it takes enforcement against those companies that it deems are not in substantial compliance.  This from the Columbus Dispatch Article discussing the Attorney General's Report:

The state has taken action against many of the companies behind the 75 projects that were not in compliance. It demanded the return of some grant money, modified terms on loans and shortened periods in which the companies were able to collect the tax credits. In other instances, the state found the companies were mostly in compliance despite coming up short and ordered no remedial action.

Incentive agreements also contain an out clause in the event there is an economic slowdown which prevents the company from meeting its commitments.  

Brownfields

One type of grant not covered in the report are brownfield grants.  This is because under the Clean Ohio Program, the grant agreement required a commitment to cleanup the property to Ohio EPA's Voluntary Action Program standards, not a specific job creation commitment.  While job creation was a metric evaluated when projects competed for Clean Ohio funding, the pledges did not make it into the grant agreements.  

That has changed under the JobsOhio Revitalization Program.  Under the new grant template being used by JobsOhio, companies are required to make specific commitments in terms of job creation, job retention and/or capital investment.  The JobsOhio agreement contains a specific deadline for meeting that commitment and the ability to require repayment of the grant in the event those commitments are not met.  

The JobsOhio agreement focus on job creation and investment  is similar to other State economic incentives.  It is an example of the shift in philosophy behind brownfield redevelopment in Ohio. Clean Ohio was focused on cleanup and redevelopment of contaminated property.  The JobsOhio Revitalization Program is focused on economic redevelopment.  

 

Overview of the Ohio EPA Enforcement Process

The Ohio EPA enforcement process can appear to be a mystery, especially to companies that find themselves the subject of an EPA visit for the first time.  This post provides a general overview of the Ohio EPA civil enforcement process.

Step 1:  The Inspection

The enforcement process starts with the inspection.  The inspections can be announced or unannounced.  (A prior post discusses EPA's inspection authority).

Typically, an inspector assigned to one regulatory area will perform the inspection. (i.e. air, surface water, drinking water, hazardous waste or solid waste).  Most time, the inspector will limit their inspection to compliance with their assigned regulatory area.

If you find multiple inspectors at your door (called a "multi-media inspection") then there is probably cause for concern.  Typically, the Agency will not perform multi-media inspections unless they suspect there is an issue at your facility.

Here are some tips regarding handling an EPA inspection:

  • Listen closely to the inspector- Accompany them during the inspection. If they point out concerns that can easily be addressed, fix them. Also, follow up in writing telling the inspector what you have done. EPA appreciates pro-active companies who listen and respond to Agency concerns. This can go a long way toward establishing a good reputation.
  • Debrief with the inspector- Don't be shy about asking for an oral report of the inspector's findings during or after the inspection. Take notes of any concerns or requests for information made by the inspector. Then follow up if possible. Don't wait for the inspector to provide a letter if you can easily address some of the issues. If you are able to provide information not available during the inspection that demonstrates compliance, you may avoid seeing these issues in a formal notice or letter from EPA.

If the violations are not corrected after the first inspection, the inspector will more than likely return in the near future to document the ongoing nature of the violations.

Step 2:  Notice of Violation (NOV)

If the inspector believes that the company or facility is not in full compliance with applicable environmental regulations, they will issue a formal letter called a "Notice of Violation' or NOV.  The NOV will specifically identify the regulation(s) that the inspector believes have been violated.  The NOV will also contain the facts observed during the inspection that the inspector believes supports their conclusion a violation has occurred.  

If you or the company receives an NOV, respond in writing. (Note:  This may be the appropriate time to consult with an environmental attorney to help craft an appropriate response)  Failing to respond will more than likely ensure the matter proceeds to Step 3 discussed below.  

When responding, make sure you gather all appropriate information.  Inspectors can be wrong in stating a violation has occurred.  However, you must be prepared to refute their finding(s) with supporting documents or information.  

Relatively minor violations can often be addressed without escalated enforcement.  However, make sure you respond as to how and when the issue will be addressed.  

It is mostly up to the discretion of the inspector to decide when to recommend escalated enforcement (Steps 3 through 5).  If violations are serious, the inspector could recommend further enforcement after only one NOV.  For less serious violations, it may take a few NOVs before an inspector recommends further action.

Step 3:  Enforcement Committee

If the inspector believes the Agency should take more formal action beyond a NOV, he/she will put together an enforcement referral from the District Office to Central Office.  The referral package will include a memorandum summarizing the issues and inspector's recommendations.

The referral package will typically be reviewed by the Central Office Enforcement Committee.  The Committee is made up of enforcement coordinators from the Division as well as an attorney from the Legal Office.  The committee will review and discuss the recommendation and decide whether to: a) proceed to Step 4; b) jump to Step 5 or; c) take no action at the present time.

Step 4:  Director's Final Findings & Orders (DFFOs)

If the Enforcement Committee decides further enforcement is necessary, in most instances they will begin with administrative orders- Director's Final Findings & Orders (DFFOs).  DFFOs contain findings of fact which set forth the basis for the Agency's conclusion that violations have occurred.

The DFFOs also contain an orders section.  The orders includes deadlines for correcting the violation  as well as proposed civil penalties.  Ohio EPA does not have unilateral civil penalty authority, therefore, any civil penalty contained in DFFOs must be agreed upon by the company.  

If the company and Agency cannot agree on terms of DFFOs, including but not limited to a civil penalty, Ohio EPA can refer the matter to the Ohio Attorney General's Office (AGO).  Once a case has been referred to the AGO, it almost never will be sent back to Ohio EPA for resolution.

You should discuss with your attorney an legal advantages to resolving a matter at the DFFO stage versus the Attorney General's Office.  

Step 5:  Referral to the Attorney Generals Office

This is the final step in the escalated enforcement process.  Once a matter is referred to the AGO, an Assistant Attorney General will be assigned to the case.  The attorney will send an initial letter asking whether the person/company would like to try and settle the matter without litigation in court.  This stepped is called an "invitation to negotiate" or ITN.  

If a settlement can be reached it will be in the form of a formal judicial consent order that is filed in court.  In order to file a consent order, a complaint (lawsuit) must be filed which contains the specific violations alleged by the State.

If the parties cannot reach agreement on the terms of a consent order, the AGO will file a complaint and proceed with litigation in court.  The AGO will typically indicate that higher penalties will be requested if the AGO is forced to proceed with litigation.

Conclusion

This meant only as a basic overview of the typical Ohio EPA enforcement process.  The specific facts of a case may result in the Agency taking different action.  

The best defense to Agency enforcement is to be well prepared and have a good team in place (technical and legal advisors).  Gather all the facts and respond strategically.  Keep in mind that no matter how the case is finally resolved, EPA will visit your facility again in the future and the process can start all over again.

Ohio EPA Begins Policy to Rotate Inspectors

Ohio EPA has recently announced a new policy of rotating personnel within its districts and divisions. The new policy will apply to inspectors and staff, but will not apply to management.  

The policy is intended to provide Ohio EPA staff with a wider range of experience and technical skill.  

This from Director Butler announcing the staff rotation policy:

"As many of you know, creating professional development opportunities in any area of business is essential to maintaining a well-rounded organization.  Many of you in the private sector offer your employees these opportunities and we are implementing a similar strategy in an effort to streamline our operations and improve the depth and breadth our employee's knowledge."
 

A second letter was sent by the Division of Surface Water announcing how the new policy will impact staff charged with reviewing Permits-to-Install and NPDES permits:

"The Division of Surface Water (DSW) staff assignments will change in the National Pollutant Discharge Elimination System (NPDES) and permit-to-install programs approximately every five years.  For NPDES permittees, this means the same staff person will likely complete one permit renewal since renewals are required every five years."

Having worked with many Ohio EPA inspectors both while at the Agency and since working in the private sector, it will be interesting to see how the new policy is received.  As expected with every large organization, there is array of expertise, temperament and communication styles among inspectors and staff.  

For facilities and business that like the inspector assigned to them, the new policy will likely not be seen as good news, especially if the newly assigned inspector isn't viewed in a positive light.  For those that have been frustrated by their current inspector or permitting staff, they may welcome the change.

While rotating personnel will certainly provide a wider range of experience to staff.  It will also have the effect of shifting institutional knowledge.  Some sites and facilities are very complicated.  It may take a few years for staff to fully understand all the operations or issues.  

Rotating staff could mean that businesses experience some level of frustration when trying to "get the new person up to speed."  Perhaps, Ohio EPA will try and accommodate these situations by maintaining continuity at these more complex sites.

If I had to predict, the Agency will likely get more calls complaining about the policy then praising it. Most people only call when they are frustrated or don't like a change. 

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.

Key Update on JobsOhio Revitalization Brownfield Program

Last week, we hosted a very successful seminar covering commercial and industrial property redevelopment.  I participated on a panel that included JobsOhio, the City of Cleveland and TeamNEO discussing brownfield redevelopment, in particular, incentives.  A major focus of the discussions was the relatively new JobsOhio Revitalization Program.  

I have worked with JobsOhio on brownfield projects and have experience with how the new program operates.  It is very different then the old Clean Ohio program which operated for over a decade.

Here are some of the key pieces of information that I learned either at the seminar or through my experience working with the program over the last year.

Available Grant and Loan Brownfield Incentives

  1. Phase II Assessment
    • Up to $200,000 in grant funds for Phase II sampling
    • Phase I must be completed prior to application
    • JobsOhio said a project "needs a high likelihood of job retention or creation, not certainty at this stage"
  2. Revitalization Loan Fund
    • Low interest loans up to $5 million, covering 20-75% of project costs
    • End user and job creation/retention
    • Industrial, commercial or mixed use w/office
    • Principal & interest free during construction (i.e. until certificate of occupancy)
  3. Revitalization Grant Fund
    • Up to $1 million in grant funds for cleanup and other eligible costs
    • Typically coupled with a loan where grant acts to fill funding gaps

Who and What is Eligible

The JobsOhio program has wider eligibility than Clean Ohio.  Businesses, developers and non-profits can all apply for incentives without going through a local governmental entity.  However, the entity cannot have been directly responsible for the environmental contamination (with some limited exceptions based on the structure of the deal).

Eligible Use of Funds

A wider array of costs are eligible for reimbursement under the JobsOhio program.  In fact, it was noted during the program that 50% of the projects JobsOhio has funded did not involve contamination.

Eligible costs include any of the following:

  • Phase II environmental assessments
  • Demolition and disposal
  • Environmental remediation
  • Building renovation
  • Site preparation
  • Infrastructure
  • Environmental testing & lab fees

Criteria for Evaluating Projects

JobsOhio utilizes three basic criteria when evaluating projects:

  1. Jobs (private sector)
    • Retained
    • Created
    • Wage rate 
  2. Investment 
    • Private v. public & JobsOhio investment
    • Capital investment in addition to site preparation
    • Priority for JobsOhio targeted industry projects
  3. Certainty of Completion
    • End user commitment
    • Completeness of redevelopment plans
    • Adequacy of project funding

Key Differences between JobsOhio and Clean Ohio

Having worked on multiple projects under both programs, it is fair to say there are very significant differences between the two programs.  Here is a list of key differences:

  1. No VAP Covenant-Not-Sue Required under JobsOhio- As discussed above, 50% of the projects don't even involve contamination.  All brownfield Clean Ohio projects involved contamination.  Even with sites that have contamination, JobsOhio says they will not require you to complete Ohio EPA's Voluntary Action Program in all cases.
  2. Application Costs and Timing-  The JobsOhio application process is significantly faster than Clean Ohio.  All applications can be filed on a rolling basis.  The amount of information required to find out whether you will receive an award is vastly different.  Under JobsOhio you can find out whether you will qualify for funding very inexpensively.  Under Clean Ohio it could cost $20k-$50k to find out whether you would be funded.  Also, funding under Clean Ohio was more of a political process that was largely determined by which projects were most favored locally.
  3. Flexibility-  JobsOhio provides greater flexibility in terms of the projects that can qualify.  Also, a wider array of costs are eligible for reimbursement under JobsOhio.  There is also greater flexibility to structure the incentives under JobsOhio to fit your project.  No rigid match requirements or artificial caps on certain costs.
  4. Confidentiality-  The Clean Ohio process was entirely public.  All applications and reports were public records.  Under JobsOhio, a company can keep deals confidential until a public announcement is made regarding the award.  There is even the opportunity to sign a Non-Disclosure Agreement with JobsOhio.  
  5. Funding- Unfortunately, JobsOhio does not provide the same level of grant funding as Clean Ohio.  For smaller, less contaminated sites this is not an issue.  For sites involving very significant contamination or complex cleanups, the $1 million in available grant funding may not be sufficient.
  6. Jobs Requirement-  All JobsOhio projects must involve either job retention or creation.  Under Clean Ohio, there was the opportunity to cleanup sites without firm job commitments in order to attract development to strategic areas.  
  7. Criteria for Award-  Clean Ohio had a published scoring system that could provide potential applicants some sense of whether they would qualify for money.  JobsOhio has the three criteria discussed above (jobs, investment and certainty of completion), but there are no hard and fast rules of when they will fund a project.

 

 

Difference between "Classic" VAP and VAP MOA

In Ohio, the primary brownfield cleanup program is known as the Voluntary Action Program (VAP).  Volunteers can cleanup their site to commercial/industrial or residential standards.  Upon completing the cleanup the volunteer can receive a legal release from the State of Ohio (called a "Covenant-Not-to-Sue" or CNS).

The CNS under the VAP does not include a release of liability from U.S. EPA.  In order to attempt to provide an option for volunteers who desired some protection from U.S. EPA enforcement, Ohio created the VAP Memorandum of Agreement (MOA) track.

I have had a few clients in the last couple months ask about the differences between the "Classic VAP" and the VAP MOA.  The main reason they ask is because they are interested in the heightened liability protection that is available under the VAP MOA process.  However, is the extra cost and longer time frames worth it?

"Classic" VAP

Under "Classic" VAP, the volunteer hires an environmental consultant who is recognized by Ohio EPA as a "certified professional" ("CP") under the VAP.  The CP performs the investigatory and cleanup work at the site to VAP regulatory standards.  Once the cleanup is complete, the CP prepares a "No Further Action Letter" (NFA) certifying that the property meets VAP standards.  

The volunteer then decides if they want the CP to submit the NFA to Ohio EPA for review.  If the NFA is submitted to Ohio EPA and the Agency concurs the property meets VAP regulatory standards, then the Agency issues a "Covenant Not to Sue" (CNS).  This is a formal legal release of liability from Ohio EPA.

As outlined above, the VAP process is a private cleanup.  There is no public involvement and no records are public until they are submitted to Ohio EPA for review.  

VAP MOA Track

MOA means Memorandum of Agreement.  The agreement is between U.S. EPA and Ohio EPA. (A copy is available here)  Under the agreement if a volunteer agrees to follow additional steps than necessary under the Classic VAP, it can receive "comfort" from the U.S. EPA that it won't pursue additional cleanup.  Those steps include:

  1. Notice of entry into the VAP MOA program;
  2. Publish notice in the local newspaper that the volunteer has entered the program;
  3. Create a document depository in the local library available to the public;
  4. Volunteer must publish the proposed work plan and allow for public comments (30 day comment period);
  5. Host a public meeting to discuss the work plan;
  6. All documents associated with the VAP cleanup must be placed into the library (includes the Phase I, Phase II, Risk Assessment Report, Remediation Work Plan, and the NFA letter); and
  7. Public can request additional public hearing during the cleanup process.

If a volunteer meets the various requirements outlined above, then U.S. EPA provides the following "comfort"

For sites or facilities that have completed the voluntary action in compliance with the MOA Track procedures...U.S. EPA Region 5 does not plan or anticipate taking action under CERCLA or RCRA while the facility remains in compliance with the MOA Track VAP requirements, except as provided in Section IV.B below.

The highlighted language makes clear that completion of the VAP MOA does not provide the volunteer a legal release from U.S. EPA.  Rather, the volunteer gets the assurance that EPA "does not plan or anticipate taking action."  Nothing prohibits such action.

In fact, the highlighted language at the end of the paragraph provides several instances when EPA can take action, including:

  • Newly discovered information after the CNS is issued indicates additional cleanup is needed;
  • Failure to comply with applicable VAP cleanup plans and Ohio EPA fails to take action to correct the situation;
  • The site presents an imminent and substantial endangerment to public health or welfare or the environment; and
  • Ohio EPA requests EPA help because the volunteer isn't make sufficient progress to complete the VAP MOA track

How Many Sites Have Gone Through the Classic VAP versus VAP MOA?

Currently, according to Ohio EPA tracking, 556 sites have submitted an NFA for review.  Not all of those sites have received a CNS.  29 NFAs were withdrawn before receiving a CNS.  

Only a total of 59 sites are identified as having entered the VAP MOA process.  Of those 59 sites, 22 sites actually submitted an NFA thus completing the VAP MOA process.  (Link to Ohio EPA list of VAP MOA sites)

What these numbers tell you is that very few volunteers have decided to spend the extra time and money to complete the VAP MOA process.  Some who even started, later left the MOA process.

Biggest Issue is Time

The biggest issue for many volunteers contemplating the VAP MOA process is the extra time involved.  Each plan is available for public comment.  A public hearing is required as well.  The extra time to complete the added upfront Ohio EPA review and public involvement can add many months on to a project. 

A review of the MOA track list shows that most projects took more than one year to complete once they formally entered the program.  Some took five or six years to complete.  It is unlikely Ohio EPA would allow a project to sit in process that long any more, but the track record clearly demonstrates the added steps will add significant time to the cleanup.

Risk Tolerance

As with many things environmental, whether to go Classic VAP or VAP MOA Track really depends upon your client's risk tolerance.  For some clients, the added comfort from U.S. EPA (even though its not a legal release) is enough.

[Photo courtesy Engineering at Cambridge]

Ohio EPA Director Scott Nally Resigns- Butler Named as Interim Director

On January 7th, Scott Nally resigned as Director of Ohio EPA after a three year stint.  Local media coverage of his resignations raised questions regarding the abrupt and surprise announcement.  Speculation included the fact that it was tied to the Nally's firing of long-time Division of Surface Water Chief George Elmaraghy earlier this year.  This from the Columbus Dispatch:

“We can’t understand what Director Nally did or didn’t do in complete lock step with this administration. Maybe he is voluntarily pursuing other interests, but it’s suspicious he didn’t personally make the announcement.”

Kasich spokesman Rob Nichols said Nally’s resignation was not connected to the resignation last year of George Elmaraghy, who was chief of the EPA division that oversees the state’s efforts to protect streams, lakes and wetlands from pollution. Elmaraghy said he was asked to step down by Nally and Kasich because of clashes with the coal industry about water-pollution permits.

With Director Nally's resignation, Craig Butler, who had served in Governor Kasich's office, was named as interim Director.  With the Governor's election this November, it it unlikely a replacement will be named until after the election.  This means Mr. Butler will more than likely serve as Director until after the election.

Butler brings a wealth of experience to the position.  He served as an industrial liaison in the Director's Office of Ohio EPA under Governor's Voinovich and Taft.  He also served as District Chief of Central District Office and Southeast District Office.  More recently, he served in Governor Kasich's Office as the Executive Assistant to various agencies, including Ohio EPA.

His background and experience will be a major asset to him as he serves as Director.  He has seen the practical implications of EPA regulations on businesses, dealt with local issues as a District Chief as well as the political side to the Agency (Both in the Director's Office and Governor's Office).  

 

Ohio EPA Guidance On TENORM Oil & Gas Related Wastes

This past summer the Ohio General Assembly passed House Bill 59 which changed various aspects of the regulatory approach toward oil & gas waste material management.  One aspect dealt with under H.B. 59 was the regulation of oil & gas related waste that may be considered technologically enhanced naturally occurring radioactive material (TENORM).  H.B. 59 provided Ohio EPA the authority to adopt rules regarding the regulation of TENORM.

What is TENORM?

To understand TENORM, one must understand what constitutes NORM- naturally occurring radioactive materials.  NORM is radioactive materials naturally present in the environment (i.e. soils, air and water).  NORM emits low levels of naturally occurring radiation and is common to the environment.   

TENORM is naturally occurring radioactive material with radionuclide concentrations that are increased by or as a result of pat or present human activities.  TENORM is regulated by the Ohio Department of Health.   Oil & gas drilling can generate TENORM.

Which oil field wastes are NORM and which are TENORM?

Certain oil & gas related waste is classified as NORM and exempt from regulation.  As set forth in the Ohio EPA Fact Sheet on TENORM (see below), drill cuttings are considered NORM and not TENORM.  Drill cuttings are the mixture of rock, soil and other subterranean matter brought to the surface during drilling of oil & gas production wells.

Oil & gas drilling related waste classified as TENORM include tank bottoms, spent drilling muds and pipe scale.  Here is a description of each of those waste streams:

  • Tank Bottoms- material accumulated in storage tanks associated with the oil & gas drilling
  • Pipe Scale- the build-up of minerals, rocks, oil and other substances that accumulate on the inside of metal casing and tubing used for the production of oil and natural gas.
  • Drilling Mud-  fluid used to cool and lubricate the drill bit, helps stabilize the well bore during drilling and keeps fluids in the formation from entering the borehole

What do the new guidance documents from Ohio EPA require?

As of September 29, 2013, any landfill or solid waste transfer facility must receive sample results of any TENORM regulation waste to ensure that the material doesn't exceed the regulatory limit of 5 pCI/g above natural background.  The facilities receiving this material must maintain daily logs that identify the waste streams from oil & gas drilling and retain copies of the sampling.

A solid waste transfer facility or landfill that wants to accept TENORM with concentrations above 5 picocuries per gram must receive proper authorizations from ODH and Ohio EPA.  Facilities may receive the material if authorized for purposes of dilution.  However, material above 5 picocuries per gram cannot be disposed of in the landfill. 

Are rules likely to be adopted by Ohio EPA regarding TENORM?

Yes.  Ohio EPA has released a fact sheet soliciting early stakeholder outreach regarding the development of rules regarding TENORM at solid waste landfills and transfer facilities.  The rules would potentially govern:

  • Monitoring leachate and groundwater for radioactive material;
  • Establishing regulations to ensure that TENORM greater than 5 picocuries per gram above natural background is not accepted at the facility.  This include development of detection and prevention plans at landfills or solid waste transfer facilities.


What available guidance documents and fact sheets are available  from Ohio EPA on this issue?

  1. Fact Sheet: Drill Cuttings from Oil and Gas Exploration in the Marcellus and Utica Shale Regions of Ohio (October 2013)
  2. Fact Sheet:  House Bill 59- TENORM Acceptance at Solid Waste Landfills and Transfer Facilities;
  3. Guidance Document:  Impact of HB 59 on Solid Waste Landfills and Transfer Facilities
  4. Municipal Solid Waste Landfill- Daily Log of Operations (Draft)
  5. Solid Waste Transfer Facility- Daily Log of Operations (Draft)

 

Ohio Looks to Tighten Nutrient Regulation to Address Toxic Algae

Pardon the pun, but toxic algae has been a growing problem in Ohio.  Significant issues with toxic algae have occurred in Lake Erie, Grand Lake St. Marys and elsewhere.  In fact, Ohio EPA recently added a new feature to their webpage in which you can track and identify toxic algae issues around the state:

 On the website, you can now view the whole state and Ohio EPA will identify those waterways in which harmful algae blooms are currently a problem.  

The website includes a list of current public health advisories.  

The increased awareness and issues associated with toxic algae has triggered initiatives to tighten regulations in hopes of eliminating harmful blooms.

Senate Bill 150-  Increased Authority to Regulate Nutrient Discharges from Farms

This summer the Kasich Administration introduced Senate Bill 150, which would provide increased regulatory authority to the Ohio Department of Agriculture and Ohio Department of Natural Resources.  The bill would require farmers to develop "Nutrient Management Plans" that would help ensure best practices were utilized in application of fertilizer to reduce nutrient runoff.  

The bill would also create a fertilizer applicator licensing program with certification and continuing education requirements.  No person could apply fertilizer for agricultural purposes without being properly certified by the state.

The other components of the bill include expansion of the types of fertilizer regulated by the state (current regulatory authority is largely limited to manure).  S.B. 150 would provide regulatory authority over commercially manufactured fertilizers.

Also, the bill would give regulatory agencies greater enforcement authority.  For example, the Director of Agriculture could revoke a persons fertilizer certification if the failed to comply with the regulations.

Ohio EPA Nutrient Regulation

While S.B. 150 attempts to address nutrient run-off from so called "non-point sources" such as farm fields, Ohio EPA has proposed increased regulation to traditional point sources (i.e. wastewater treatment plants).  This spring Ohio EPA released a proposal to target watersheds that may need to have nutrient permit discharge limits included in NPDES permits.  

Under the proposal, waterways would go through a stream survey evaluation process. The following factors would be evaluated under the Agencies proposed "Trophic Index Criteria:"

  • Dissolved oxygen;
  • Nitrogen and phosphorus concentrations;
  • Algal biomass; and
  • The biological community.

By evaluating these criteria, the Agency will assign the waterway a category of either "Impaired", "Threatened" or "Acceptable."  Impaired waterways would likely see the imposition of nutrients discharge limits in future NPDES permits.  

Conclusion

With increased awareness of toxic algae, it appears the state is moving quickly to try and increase regulation of nutrients.  The state is at the early stages of increased regulation.  New proposal are almost certainly forthcoming. 

 

Court Orders Ohio EPA to Add More Compounds to "Air Toxics List"

Back in 2006, when I was Ohio EPA, I worked on Senate Bill 265 which was the first major overhaul in air pollution regulation in Ohio in over a decade.  One component of S.B. 265 was to provide authority to Ohio EPA to regulate air toxics.  

Prior to enactment of S.B. 265, Ohio EPA did utilize an "air toxics policy" that was used to evaluate whether an air pollution source should obtain a permit due to emission of certain air toxic compounds above certain thresholds.  As a policy, the Ohio EPA did not have clear legal authority to enforce the requirement.  After enactment of S.B. 265, the Ohio EPA was given that authority.  The bill required the director to adopt a list within two years of passage of the bill of those air toxics that could trigger permitting.  

There are literally thousands of compounds that could be considered toxic. Ohio EPA decided to rely upon toxicity information compiled by the American Conference of Governmental Industrial Hygienists ("ACGIH"")  The toxicity value developed by ACGIH is referred to as a chemical's threshold limit value ("TLV"). The TLV represents the value to which a worker could be exposed without health effects.

However, TLVs are based upon worker exposure (8 hour and 5 day work week).  Ohio EPA felt that the number could be too conservative for residential exposures (24 hours and 7 days a week).  Therefore, Ohio EPA took the TLV for each compound and divided it by 10 as a "safety factor."  The result is a standard Ohio EPA refers to as the Maximum Achievable Ground Level Concentration ("MAGLC"). This is the value which it believes a resident living near a facility would not experience health effects.

Ohio EPA Reduces the List of Toxics

With so many chemical compounds, Ohio EPA tried to concentrate on those they felt presented the greatest risk of health effects.  Ohio EPA culled the list based on toxicity to 639 compounds.  Then, utilizing various factors discussed below, Ohio EPA cut down the original list to 303 total compounds. See, OAC 3745-114-01.

The factors utilized to cut down the list to 303 compounds included:

  1. If the compound was used in consumer products or regulated by other agencies (such as pesticides), then they were excluded;
  2. If the only pathway for exposure was non-inhalation (i.e. dermal contact, ingestion);
  3. If health effects are caused by exposure which is sudden and of short duration, such as those caused by emergency release events, including explosions or catastrophic malfunction (referred to as "acute exposure");
  4. Compounds no longer used or produced in Ohio; and 
  5. Those compounds that only cause irritation, not serious health effects.

Legal Challenge

The Sierra Club filed a legal challenge to the final air toxic rule.  The environmental group said the five factors used to cut the list from 639 to 303 compounds were unlawful.  

The 10th Appellate Court upheld three out of the five factors.  See, Sierra Club v. Koncelik  The Court found that Ohio EPA should not have eliminated compounds simply because they currently aren't utilized in the State, because they may in the future.  Also, the Court said that Ohio EPA should not have eliminated compounds that posed health effects only through non-inhalation routes of exposure (i.e. dermal contact or ingestion).  

As a result of the Court ruling, Ohio EPA will be adding to the list of 303 compounds. 

Air Emissions Violations Presumed Continuing in Nature for Purposes of Civil Penalties

On December 6, 2012, the Ohio Supreme Court issued a rare opinion pertaining to the proper calculation of civil penalties in the context of an environmental enforcement action.  The decision has serious ramifications for any company that is required to perform stack tests to demonstrate compliance with air emission standards.  It also may impact any company that has been issued a notice of violation for an air emission violation.

In State ex rel. Ohio Atty. Gen. v. Shelly Holding Co., Slip Opinion No. 2012 – Ohio – 5700 (Dec. 6, 2012), the Court found that once a violation of an air emission permit or regulatory limit has been demonstrated, the violation is presumed to be continuing in nature until the company provides convincing rebuttal evidence that the violation has ceased.  This finding means that any company that exceeds an air emission limit must act quickly to change operations or reduce emissions to demonstrate compliance.  Otherwise, the company could face a very large civil penalty because each day of non-compliance could warrant a penalty up to $25,000 per day.

Rebuttal of the Presumption Air Emissions Violation is On-Going

The Shelly company had failed a stack test of its asphalt plant.  A key aspect of the failed stack test was that it had to been run under "worst case" conditions- Meaning the emissions were measured when the facility was operating at maximum capacity.  The Court held that the failed stack test established that there was an emission limit violation.  

The State asserted civil penalties were owed for each day following the failed stack test until the Company demonstrated it had returned to compliance.  Shelly argued that it was inappropriate to presume such a violation was continual in nature when its normal operations were not at maximum capacity. 

While the trial court had agreed with the Company, the Supreme Court disagreed with Shelly and concluded the burden was on the Company to demonstrate it returned to compliance through one of the following:

  1. A subsequent stack test at maximum capacity that showed emissions within permit limits;
  2. A revised permit or variance;
  3. Operating conditions during the stack test no longer existed;
  4. Mechanical failures were repaired; or
  5. Raw materials and fuels were changed.

However, relative to numbers 3 through 5, the Court suggested a company would need to supply convincing evidence that emissions were actually within limits.  For example, the Court rejected Shelly's argument that normal operating conditions where below maximum capacity and, therefore, the State lacked evidence it violated emission limits on days other than the initial stack test. 

 

U.S. EPA Proposes New P.M. 2.5 Federal Air Quality Standard

Under increasing pressure from the Courts, EPA announced on June 14th its proposed revision to the federal air quality standard for fine particles (microns less than 2.5).  The last standard was 15 ug/m3 which was established in 1997.  EPA is now proposing to lower the standard somewhere between 12 and 13 ug/m3. 

Back in 2009, the Court overturned EPA's proposal to keep the standard at 15 ug/m3.  Since that time various groups have been trying to force EPA to promulgate a new standard.

In May, the District Court of Columbia had granted a motion for preliminary injunction sought by the American Lung Association, other environmental groups and the States.  The case is American Lung Association et al. v. EPA, No. 1:12-cv-00243-RLW (D.D.C.).  The order resulted in EPA accelerating release of its proposed standard.

Background on Federal Air Quality Standards (National Ambient Air Qulity Standards- NAAQS)

Counties that fail to meet the federal air quality standard are designated "non-attainment."  Under the Clean Air Act, non-attainment areas face more difficult air permitting requirements for larger air sources which can deter economic development. 

In addition, each state must develop a plan (called a "State Implementation Plan" - SIP) to meet the federal standards.  The SIP must demonstrate that a mix of federal and state air pollution regulations will allow each of the counties in the state to meet the standard.  The SIP process often results in state's implementing new pollution control requirements which increase compliance costs.

States that fail to meet the deadline for attaining the standards face sanctions from EPA. 

Ohio's Progress in Meeting the PM 2.5 Standard

Due to its relatively high population and manufacturing base, Ohio has always faced challenges in meeting air quality standards.  Ohio still has areas that have failed to properly demonstrate compliance with the 1997 fine partcle standard. 

Below a is chart from a presenation by Ohio EPA from March which shows current monitoring of air quality in the major cities in Ohio:

It is worth noting that an improvement of 1 ug/m3 is quite significant. 

The Chart shows Ohio's air quality is improving.  However, even if EPA picks the high end of the range and sets the new standard at 13 ug/m3, the State will  have a number of counties designated as non-attainment areas. 

U.S. EPA says they will make designations of counties in December 2014 with non-attainment designations will become legally effective in early 2015.  States will be given until 2020 to comply with the standard.

National Progress in Meeting the Standard Hinges on Proposed EPA Rules

U.S. EPA projects that only a couple of counties will be out of attainment by 2020. 

However, this projection is based upon a major assumption- all currently proposed federal air pollution rules remain effective.  Many of these rules are highly controversial and face legal as well as political challenges. The federal rules EPA considered in place for purpose of the modeling  include: the Cross State Air Pollution Rule (power plans), the Mercury and AIr Toxics Standard (power plants) and various emissions standards for vehicles, aircraft, locomotives and ships.

 

Appeals Court Revokes Injunction Which Had Blocked Ohio EPA's BAT Exemption for Small Air Pollution Sources

Back in 2006, the Ohio Legislature passed Senate Bill 265 which was hailed as the biggest change to air pollution control regulations in Ohio in several decades.  The center piece of the legislation was an exemption for smaller sources of air pollution (10 tons per year or less) from having to comply with Ohio's Best Available Technology (BAT) standard. 

The BAT standard was seen as requiring more air pollution controls than other states thereby raising compliance costs for Ohio businesses.  Business groups argued that the BAT standard put Ohio at a competitive disadvantage.

When the exemption was passed in 2006, Ohio EPA started to issue permits to companies with less than 10 tons per year (tpy) in emissions without requiring BAT.  For around three years, permits were issued to businesses in this manner.

Ohio Seeks Blessing from U.S. EPA to Remove BAT Requirement

While Ohio EPA issued permits to companies without the BAT requirement, the State still was required to obtain approval from U.S. EPA to remove this requirement from its approved plan to comply with federal air pollution standards (referred to as the "State Implementation Plan" or SIP).  Each State must submit a SIP to U.S. EPA for approval which demonstrates it will meet federal air quality standards.

The BAT requirement is in Ohio's approved SIP.  In June 2008, Ohio EPA sought approval from U.S. EPA to remove the requirement.  (See, prior post).   U.S. EPA requested information from Ohio EPA to support removal of the BAT requirement.  Six years after S.B. 265 was passed, Ohio EPA still has not been able to supply the information to U.S. EPA to secure approval to change its SIP to allow for the 10 tpy BAT exemption. 

Failure to secure U.S. EPA's approval created a challenging regulatory environment.  S.B. 265 and the BAT exemption was Ohio law.  However, U.S. EPA never approved the change to the SIP.  Therefore, from U.S. EPA's vantage point Ohio sources still need to comply with the BAT requirement and Ohio is in non-compliance with the Clean Air Act.

Sierra Club Challenges the Ohio BAT Exemption

In September 2008, the Sierra Club sued the Director of Ohio EPA under the Clean Air Act citizen suit provisions.  The Sierra Club argued that the Director was in violation of the Clean Air Act because it was issuing permits to companies with less than 10 tpy in emissions without the BAT requirement.  Since U.S. EPA didn't approve the 10 tpy BAT exemption, the Sierra Club argued Ohio was in violation of its SIP.

The District Court ultimately agreed with Sierra Club an issued an injunction requiring Ohio EPA to enforce the BAT requirement regardless of the 10 tpy exemption in S.B. 265.  On July 2, 2010, Ohio EPA issued  memorandum to all air permit staff within the Agency to start enforcing the BAT requirement against sources less than 10 tpy.

Since July 2, 2010, Ohio EPA has been issuing permits to sources less than 10 tpy with the BAT requirement. 

Sixth Circuit Overturns District Court

On May 25, 2012, the Sixth Circuit Court of Appeals issued a decision which overturns the District Court ruling and removed the lower Court's injunction against Ohio EPA.  The Sixth Circuit Court held that the Sierra Club, as a citizen group, did not have a legal basis to bring the lawsuit. 

The Court held that the citizen suit provision of the Clean Air Act only allows lawsuits against sources that violate an emission standard.  The Court held the citizen suit provision does not allow suits against regulators (i.e. Ohio EPA) who are not in compliance with their SIP. 

The Court noted that the Clean Air Act gives exclusive power to U.S. EPA to take action against a State refusing to comply with its SIP.  After waiting for the eighteen months required under the Clean Air Act, U.S. EPA can:

  1. Can take direct enforcement against businesses who are not complying with the BAT requirement;
  2. Can take over administration of Ohio's SIP; or
  3. Can sanction Ohio for failing to comply with its SIP by withdrawing the State's federal highway funds.

In the Six Years since Reforms were passed Ohio Businesses face Greater Regulatory Uncertainty

Some other commentators have suggested that the Sixth Circuit ruling clears the path for Ohio EPA to exempt small Ohio businesses from the 10 tpy BAT exemption.  However, until Ohio EPA actually secures U.S. EPA approval for the 10 tpy exemption, nothing is certain.

  • Businesses that received permits during the time period from 2006 to 2010 when Ohio EPA was not requiring BAT on 10 tpy sources could face direct enforcement from U.S. EPA;
  • Businesses emitting 10 tpy or less that received permits from 2010 to 2012 were required to comply with BAT even though the District Court injunction has since been invalidated;
  • After the ruling will Ohio EPA begin issuing permits to sources less than 10 tpy without requiring BAT?  If so, the universe of companies facing potential U.S. EPA enforcement will grow

The only good resolution to this uncertainty is for Ohio EPA to immediately gather the information requested by U.S. EPA and secure approval for its SIP modification.   However, this is not something Ohio EPA has been able to do in several years due the complexity involved with U.S. EPA's request. 

The 2008 letter from U.S. EPA denying Ohio EPA's request to amend the SIP makes clear Ohio EPA needs to do more than just provide information to U.S. EPA.  Rather, Ohio EPA would likely need to propose new controls to replace the reductions U.S. EPA believes were obtained through implementation of the BAT requirement (i.e. the Clean Air Act's "anti-backsliding" requirement).

In otherwords, for the reforms to be fully implemented after six years, Ohio EPA will likely have to impose greater regulation on some subset of Ohio businesses.

Ohio EPA's Asbestos Rule Change Continues to Generate Controversy

In two prior posts, I discussed the recent Ohio EPA rule change to its asbestos rules.  As discussed previously, Ohio EPA added a single sentence to definition of "friable asbestos" appearing in Ohio Administrative Code Rule 3745-20-01.  The sentence states:

Any category I or category II asbestos containing material that becomes damaged from either deterioration or attempts at removal or abatement resulting in small fragments the size of four square inches or less shall also be considered friable or RACM.

The change is being referred to as the "four square inch" rule. 

Since the rule change was issued, many contractors and industry officials have commented that it represents a significant change that directly impacts abatement and demolition practices.  Ohio EPA has maintained that all they were doing was providing greater clarity as to what the term "small fragments" refers to in the rule.

BECO Luncheon Highlights Controversy Regarding the Rule

This afternoon I attended the Building Environment Council of Ohio (BECO) luncheon where a panelist of three Ohio EPA staff were present to discuss and answer questions regarding the rule.  A simple once sentence change resulted in more than two hours of discussion. 

Why so much discussion?  The dispute seems to boil down to whether non-friable asbestos category I material, such as vinyl floor tile or roofing material, must be removed prior to demolition of the structure. 

Contractors in the audience told Ohio EPA that it was virtually impossible to demolish a large structure without breaking up Category I material into four square inches.  They also asserted that if the demolition didn't break up the material, the clean up afterward would more than likely result in four squire inch pieces.  Contractors noted that U.S. EPA guidance suggests Category I non-friable asbestos can remain during demolition.

Ohio EPA responded that they felt the rule change had nothing to do with the issue of removal prior to demolition.  The Agency indicated all the rule does is define what constitutes "small fragments."  The Agency personnel acknowledged the U.S. EPA guidance and said its still the rule that non-friable material can remain during demolition, but noted, even prior to this rule change- you run the risk material gets broken up into small fragments which we could consider a potential violation.

The Agency mentioned that in West Virginia and Tennessee the asbestos rules simply require removal of all Category I non-friable material prior to demo.  Contractors in the audience asked the Agency why they didn't simply write the rule to require removal like those other states. 

Ohio EPA responded that they wanted to preserve the option that building owner did not have to remove the Category I non-friable material prior to demolition.  Staff said that "perhaps the owner is very confident demolition won't result in small fragments."  It was noted by several in the audience that the lack of clear standard puts demolition contractors in a very tough spot.

The takeaway from the discussion-  If you leave Category I asbestos material in place during demolition, you run the risk that from the point of demolition to disposal in a landfill it gets broken into small fragments which the Agency may consider a violation.  The Agency said said one piece four inches in size wouldn't be a violation, there would have to be a "substantial" amount of such small fragments.  What constitutes "substantial" would be decided on a case by case basis.

Ohio EPA Wants to Take Over Wetland and Stream Permitting from the Army Corps of Engineers

Another aspect of Governor Kasich's controversial proposed legislation- Senate Bill 315- is to provide the legislative authority for Ohio EPA to take over Section 404 Clean Water Act permitting from the Army Corps of Engineers.  Section 404 permits are needed prior to impacts to streams or wetlands within federal jurisdiction. 

The bill itself doesn't really do that much.  It simply provides the authority to the Director of Ohio EPA to seek approval from U.S. EPA to assume responsibility for administering the Section 404 permitting program.  The real important issues will be covered in the approval request itself. 

As discussed below, the biggest issue Ohio EPA faces is to convince U.S. EPA in its request that it has sufficient resources to take over all the Section 404 permitting functions from the Army Corps.

What's good about the proposal

Right now any developer that needs to impact wetlands or streams as part of their development will typically need to obtain two permit approvals.  First, they must obtain a Section 401 Water Quality Certification from Ohio EPA.  Second, if the wetland or stream is considered within federal jurisdiction, the developer must obtain a Section 404 permit from the Army Corps of Engineers. 

The fact two permits will be needed won't change if Ohio takes over the Section 404 program.  However, developers will have the opportunity to go to one regulator to obtain both certifications.  This will hopefully streamline the process. 

Another major complication under the current structure is that Ohio is divided among four different Army Corp Districts- Pittsburgh, Buffalo, Louisville and Huntington.  Each of the Districts has very different ways they process Section 404 permits.  Therefore, another benefit of Ohio taking over the program would be greater consistency. 

Approval Process Will Be Lengthy and Difficult

While there are good reasons for Ohio to take over Section 404 permitting, it will be a very lengthy and difficult process.  First, Ohio EPA will have to show that it has sufficient resources to handle all the duties performed by the Army Corps.  I have heard projections that this could take up to forty (40) additional staff in Ohio EPA wetland section. 

This would be a very substantial increase in staff and the resources will be very difficult to come by.  Unless, Ohio EPA is going to direct fees that are currently being used to support other programs, the Agency would need to seek a fee increase or new fee.  While applicants may like the streamlined process, its unlikely they will want to pay substantially more for it. 

If the Director was going to tap into current fees, such as the solid waste disposal fee, he will have to likely cut other programs.  Also, the solid waste industry may object to use of the disposal fees to pay for significant new staff in program that doesn't directly deal with management of solid waste.

Even if Ohio EPA clears the hurdle of demonstrating sufficient resources, it will still need to prove to U.S. EPA its has the legal authority to carry out the same functions as the Army Corps.  The last time the State of Ohio tried to convince U.S. EPA of something similar it was transfer of the water permitting program (NDPES) for large farms to the Department of Agriculture.  This process has taken years and involves only a transfer between two state agencies. 

While the idea may sound good in theory, Ohio faces a significant uphill climb to make this proposal a reality.

 

Ohio EPA Loses in Court Over "Friable Asbestos" Triggering Rule Change

In a prior post (Ohio EPA Asbestos Rule Changes Could Prove Costly), I discussed Ohio EPA rule change to the definition of friable asbestos.  As discussed in the prior post, Ohio EPA added a single sentence to definition of "friable asbestos" appearing in Ohio Administrative Code Rule 3745-20-01.  The sentence states:

Any category I or category II asbestos containing material that becomes damaged from either deterioration or attempts at removal or abatement resulting in small fragments the size of four square inches or less shall also be considered friable or RACM.

It appears that the Ohio EPA rule change was triggered by the fact is lost in Court over this very issue- whether small pieces of category I ACM were "friable asbestos" triggering NESHAP management regulations.  Not only did Ohio EPA lose at the trial court level, it now has also lost on appeal. 

A Battle of Experts

The appellate court decision was issued March 30th in State of Ohio v. Titan Wrecking & Environmental LLC.  The case involved the removal of vinyl floor tile in a Cleveland School prior to demolition. 

The issue was whether Titan's method of removal (use of a bobcat to pull up the tile) caused the tile to become "regulated asbestos containing material" (RACM) and subject to asbestos regulations (the NESHAP regulations).  State experts asserted at trial that the vinyl floor tile was rendered friable and/or that it had been subject to grinding by Titan's removal activities and, as a result, Titan should have complied with the emission control and disposal procedures set forth in the Ohio Administrative Code.

Ohio EPA asserted that contractors cannot deliberately cause ACM tile to become friable by removal.  That the tile should have been removed intact and remain that way all the way through disposal.  The fact the tile was "broken into small pieces...some pieces smaller than a dime" meant it had become friable.

Titan's expert said U.S. EPA had removed the term "broken" in prior guidance.  Current EPA guidance says the tile must be "crumbled, pulverized, or reduced to powder" to be considered friable, not just broken. 

The Court said it weighed the evidence and the testimony of the experts and agreed with Titan's expert (Wayne Ingram- Testing Services International)  The Court of Appeals refused to overturn the trial court's decision that broken vinyl floor tile was not enough evidence to conclude it had become friable.

After Losing in Court Ohio EPA Changes the Rule

As you can see from the description of the case, the issue really came down to whether broken pieces of floor tile triggered asbestos regulations.  Since Ohio EPA lost based on expert witness testimony and a review of current EPA guidance, Ohio EPA decided to amend the rule to specifically add language incorporating their preferred interpretation.

As discussed in the prior post, the rule change could prove costly for contractors who typically preferred removing floor tile or other ACM prior to demolition. 

 

Ohio EPA Asbestos Abatement Rule Changes Could be Costly

Ohio EPA has finalized changes to its asbestos regulations which govern notification and work practices for asbestos abatement.  Ohio EPA described the changes as minor.  However, one change in particular could impact asbestos abatement contractors. 

Ohio EPA modified the definition of "friable asbestos material" appearing in Ohio Administrative Code Section 3745-20-01.  The only change was to add the following underlined language to the definition:

"Friable asbestos material" means any material containing more than one per cent asbestos by area, as determined using the method specified in 40 CFR Part 763, Subpart E, Appendix E, Section 1 Polarized Light Microscopy (PLM), that, when dry can be crumbled, pulverized, or reduced to powder by hand pressure.  If the asbestos content is less than ten percent as determined by a method other than point counting by Polarized Light Microscopy, verify the asbestos content by point counting using Polarized Light Microscopy.  Any category I or category II asbestos containing material that becomes damaged from either deterioration or attempts at removal or abatement resulting in small fragments the size of four square inches or less shall also be considered friable or RACM.

According to papers Ohio EPA filed as part of the rulemaking process, this rule change is a simple clarification of the definition of RACM and friable Asbestos Containing Materials (ACM).  Ohio EPA also asserts U.S. EPA has a similar interpretation.

However, this sentence does not appear in the federal rules found in 40 CFR 61.141.  Therefore, it is easy to read this as an expansion of what constitutes "friable asbestos material."  In addition, Ohio EPA statement doesn't exactly appear consistent with guidance provided by U.S. EPA on the subject:

Category I non-friable ACM must be inspected and tested for friability if it is in poor condition before demolition to determine whether or not it is subject to the Asbestos NESHAP. If the ACM is friable, it must be handled in accordance with the NESHAP. Asbestos-containing packings, gaskets, resilient floor coverings and asphalt roofing materials must be removed before demolition only if they are in poor condition and are friable.

Ohio EPA may say the four square inches referenced in the rule is an indication the material is in poor condition.  The rule does not say where the line is drawn.  What if only one piece is damaged with pieces less than four square inches?  Does that mean ALL the floor tile must be remove prior to demolition?

In talking with asbestos abatement contractors, this rule change has the potential to significantly impact demolition and renovation projects.  Under the new definition, ACM flooring tile and other projects may need to be removed by a licensed asbestos abatement contractor prior to demolition.  Also, roofing project that involve ACM roofing materials may also have to be performed by a licensed asbestos abatement contractor. 

If either ACM floor tile, roofing material or other materials are damaged during the removal process or demolition, the contractor and the owner of the building risk a possible citation for failing to remove friable asbestos material prior to demolition.  OAC 3745-21-04(A)(1)(a)

It is also interesting to note that Ohio EPA indicated in the rule filing there will be no impact on revenues or expenditures due to increased compliance costs.

It is my understanding that Ohio EPA will be performing in-house training of its inspectors to ensure consistency in applying the rule change. However, it may have been more prudent to provide greater clarity in the rule itself. 

Ohio EPA Reform Bill Introduced

Last week Senator Schaffer introduced Senate Bill 294- dubbed the EPA reform bill.  According to testimony from Senator Schaffer and OEPA Director Scott Nally, the two had been working on the legislation for months.

This bill is the probably the first since Ohio EPA creation that touches on so many different areas of EPA regulatory authority, including:

  • Infectious waste- eliminate duplicate regulation
  • Wetland mitigation- change the hierarchy of mitigation (see below)
  • Underground storage tank clean up at brownfields- streamlines brownfield clean up (see below)
  • Compliance assistance to small businesses- expands confidentiality for inquiries for assistance by small businesses
  • Construction & demolition debris fees- clarifies fees apply to asbestos containing material
  • Statute of limitations for environmental enforcement actions- applies statute of limitations to enforcement actions related to construction & demolition debris
  • Regulation of public water systems and public water system operators- establishes criminal penalties for falsification and vandalism related to public drinking water systems
  • Disposal of solid waste- bans disposal of certain aluminum production waste after issues with fires at Countywide landfill

While the bill is broad in scope, many of the changes are minor fixes to address out of date statutory language.  The biggest changes fall into the following areas:

Wetland Mitigation- 

Anytime a developer impacts wetlands, they must offset the impacts with mitigation.  Under current law, the hierarchy of mitigation required the developer to, first, try and perform mitigation on-site by creating new wetlands.  Then mitigate off-site, but in the same watershed.  If on-site and off-site mitigation weren't possible, the final option was purchasing credits at a wetland mitigation bank owned and operated by a third party. 

Years ago, Ohio EPA studied the effectiveness of on-site mitigation and found that most newly created wetland were failing.  This prompted a lengthy discussion about the merits of using wetland banks versus developer driven mitigation projects.

S.B. 294 flips the hierarchy on its head.  Now, the preferred option is purchasing credits at a mitigation bank.  Such a change may allow for better success in terms of survival of man-made wetlands.  Also, a preference towards banks should greatly accelerate the permitting process for developers who often get bogged down in trying to find mitigation sites.

S.B. 294 also provides Ohio EPA with the authority to start an in lieu fee program.  Under such a program, a developer could simply write a check paying for mitigation credits versus finding a mitigation project or bank.  Ohio EPA, ODNR or a private entity operating the in lieu fee program could then use the funds to start mitigation projects they select.  This option assist developers when they can't find sufficient credits at an acceptable mitigation bank.

Underground Storage Tanks at Brownfields-

This has long been an issue highlighted on this blog.  Under current Ohio law, any business or developer cleaning up a brownfield is forced to go through two separate clean up programs if their site has underground storage tanks regulated by the Bureau of Underground Storage Tank Regulation (BUSTR).

Under Ohio law, any areas of brownfield site with BUSTR tanks is ineligible for participation in the Voluntary Action Program (VAP) until it, first, clean up the BUSTR tanks in accordance with BUSTR regulations.  Never mind that the VAP clean up standards and BUSTR were equivalent in their protection of human health and the environment.

What resulted is lengthy delays at brownfield sites while the volunteer addressed all BUSTR tank issues prior to proceeding with the VAP.

S.B. 294 will allow any person cleaning up a brownfield to use the VAP to address BUSTR tanks as long as two conditions are met:

  1. The VAP clean up also addresses other hazardous substances or petroleum that is not BUSTR regulated; and
  2. The fire marshal has not issued an enforcement order requiring BUSTR closure.

This is a great reform that is a long time coming.  It should make brownfield as well as VAP clean ups at operating sites far less complicated.

Compliance Assistance for Small Businesses

Ohio EPA has the Office of Compliance Assistance and Pollution Prevention (OCAPP).  OCAPP allows small business to call EPA staff and ask for assistance with permitting or compliance issues without fear of enforcement. 

Under existing law, only inquiries regarding air permitting are confidential.  S.B. 294 would make inquiries into other permitting programs confidential.  This gives the business the comfort of knowing their noncompliance, by law, cannot be reported to other EPA divisions or offices. 

OCAPP can be a great tool for small businesses to cost effectively untangle complex EPA regulations and file for permits.  S.B. 294 will enhance OCAPP's capabilities.

Introduction Just Marks the Beginning of the Legislative Process

S.B. 294 will be very interesting to watch as it proceeds through the legislature.  Will Senator Schaffer and Ohio EPA be able to prevent it from becoming a "Christmas Tree", where every group and legislator tries to include their concepts or ideas for reforms to EPA?

Time will tell.

 

Recent Court Case Limits Ohio EPA Enforcement Authority and Ability to Recover Costs

A recent court case calls into question Ohio EPA's legal authority to recover certain costs related to investigation and clean up of contaminated sites.  The case also raises questions about Ohio EPA's long standing practice to negotiate administrative settlements of enforcement actions.

On January 18, 2012, the First District Court of Appeals in Hamilton County issued a decision in DeWine v. Mass Realty.  Due to the serious implications that may stem from this decision, it is certain the State will seek a appeal to the Ohio Supreme Court.

Recovery of "Response Costs"

Ohio EPA has long pursued recovery of costs it incurs in investigating, cleaning up and taking enforcement actions at sites that have soil and groundwater contamination.  Ohio EPA tracks the time its personnel work on these properties and routinely recovers such costs through enforcement actions against the owners or operators of those sites.  Ohio EPA relies on R.C. 3734.20 as the basis of its authority to recover such costs.

The Court in Mass Realty said that Ohio EPA had over reached its statutory authority under R.C. 3734.20 in terms of the types of costs it could recover.  The Court said Ohio EPA's authority is limited to costs the Agency's incurs directly related to "investigation" or "corrective measure."  The Court said that staff time and travel costs were simply "normal office overhead items" for which Ohio EPA does not have the legal authority to recover.

The Court's view of costs recoverable under R.C. 3734.20 is more limited than U.S. EPA's ability to recover response costs under CERCLA (Superfund). 

Enforcement Authority

For decades, Ohio EPA has negotiated resolution of enforcement actions with companies using administrative order settlements.  These orders are referred to as Consensual Director's Findings & Orders ("Consensual F&Os").

Use of agreed settlements is important to Ohio EPA because it lacks the authority to unilaterally impose civil penalties. By negotiating resolutions of enforcement actions, Ohio EPA could impose penalties without having to refer those cases to the Ohio Attorney General's Office.

In virtually all Consensual F&Os issued over the last decade, Ohio EPA routinely cited to R.C. 3745.01 as its legal authority for such actions.  Ohio EPA has argued this statutory provision provides the Agency the ability to enter contracts.  Ohio EPA says Consensual F&Os are contracts- a voluntary agreement to resolve violations between the Agency and companies or individuals.

The Court rejected Ohio EPA's claim.  It said that R.C. 3745.01 did not provide the legal authority for such Orders.  The Court said Consensual F&Os goes beyond the type of contracting authority granted the Agency by the Ohio Legislature.

Potential Impact of the Ruling on Ohio EPA's Enforcement Process

Ohio EPA stopped issuing enforcement reports in 2006.  However, reviewing the charts from the last available report, highlights the significant issue that the Agency faces should Ohio EPA be found to lack the authority to impose penalties through Consensual F&Os.

 If Ohio EPA is forced to refer every case to the Attorney General's Office that it wishes to impose a civil penalty could mean a 400% increase in the number of cases referred.

 

 

 

 

 

Another $20 million Available in Ohio for Diesel Retrofits, Replacements and Repowers

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

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

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

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

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

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



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

New BUSTR Classification for Underground Storage Tanks Meant to Accelerate Clean Ups

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)

Ohio and Pennsylvania Debate Regulation of Hydraulic Fracking Wastewater

Hydraulic fracking provides the opportunity to tap into massive natural gas reserves which is located deep beneath the earth.  In Ohio and Pennsylvania, Marcellus and Utica Shale is sedimentary rock which contains huge quantities of natural gas.

Hydraulic fracking uses water injected at high pressure to break up the rock allowing the gas to be released into wells.  The process uses large amounts of water.  One well may use up to three to eight million gallons of water in about a week. 

Most of the water stays deep underground, but around 10% resurfaces and is called flowback water.  Regulators consider flowback water wastewater from an industrial operation because the water contains total dissolved solids (TDS), salts and metals/oils used to aid in the fracking process.

Disposal of the flowback water has been hotly debated in Pennsylvania where massive quantities of the water have been generated.  Pennsylvania Department of Environmental Protection (Pennsylvania DEP) estimates 235 million gallons of flowback water was generated in 2010.

Methods for Disposal of Flowback Water

The primary method of disposal of flowback water in Pennsylvania was through publicly owned sewage treatment plans (POTWs).  However, concerns emerged that POTWs could only dilute the water, not treat it prior to discharge to streams and rivers. 

Pennsylvania passed regulations establishing effluent standards for treatment of flowback water.  However, the regulations exempted existing loads and only kicked in if a treatment facility was expanding.  Pressure mounted on DEP to regulate disposal of all flowback water.

Industry Voluntarily Ceases Use of POTWs in Pennsylvania

Last week, Pennsylvania DEP announced that the oil/gas industry voluntarily agreed to stop the practice of shipping flowback water to POTWs.  The DEP announcement from last Thursday was covered in Pennlive.com:

Environmental Protection Secretary Michael Krancer told officials in a meeting in Washington, D.C., on Thursday that drilling wastewater is no longer being discharged to rivers or streams in Pennsylvania without full treatment.

DEP spokeswoman Katy Gresh said the agency has not yet confirmed full compliance with Krancer’s request that drillers voluntarily stop taking the wastewater to such facilities.

But she said it has confirmed that “We’ve gone from millions and millions of gallons being discharged to virtually none.”

After the announcement, its seems clear Pennsylvania is moving toward use of dedicated treatment facilities that can treat the brine and materials in flowback water.  Approximately 25 of these facilities are slated to open. 

Debate over Disposal of Flowback Water Shifts to Ohio

Perhaps seeing the debate unfold in Pennsylvania, Ohio regulators decided they needed to tackle the issue over disposal of flowback water.  In part, the issue was brought to a head by a company, Patriot Energy Partners, who had built and operated a pretreatment center connected to the City of Warren's POTW.  The company also was in process to build and operate facilities in Steubenville and East Liverpool.

On May 16th Ohio EPA issued a letter to the Ohio Department of Natural Resources clarifying regulatory authority over the disposal of flowback water.  In part, the letter was issued to clear up a debate between the Agencies as to who had regulatory authority since ODNR regulates oil & gas drilling and Ohio EPA regulates POTWs through NPDES permits.

The letter set forth the Agencies regulatory determination on several key issues:

  • ODNR has regulatory authority over the disposal of flowback water (letter uses the term "brine")
  • POTWs will not be allowed to accept flowback water for disposal (the City of Warren permit will not be renewed)
  • Current Ohio law (R.C. 1509.22) only allows disposal of flow back water by the following methods:
    • deep well injection into underground formations
    • road surface application
    • catchall: other approved methods by ODNR

For practical purposes, deep well injection will likely be the primary method of disposal in Ohio unless its shown that dedicated treatment facilities are a cheaper disposal option.  Its interesting to note that Pennsylvania has only one commercial deep well and Ohio has approximately 150 wells that may be capable of disposing of flowback water.

 

Policies Released on Brownfield Loan Program

The Ohio Department of Development working with the Ohio Water Development Authority (OWDA) has released their policies for use of the revamped low interest brownfield loan program.  Under the program, private companies (among others) can get a low interest loan up to $500,000 for performing sampling (assessment) and up to $5 million for clean up.

As discussed in my prior post announcing changes to the loan program, the single biggest change is that the loan program now allows companies that own contaminated property and caused or contributed to the contamination to qualify for the program.  Any company that caused or contributed to contamination is not directly eligible for Clean Ohio funding.

Here are some key requirements that are spelled out in the new policies governing the program.

  • Clean Up Loans- Must already have done all the assessment and have designed a remedy to qualify for a clean up loan. 
  • Redevelopment Requirement?-  The ODOD website says the project must involve redevelopment for the property to be qualify for the loan.  Therefore, it would appear an existing company with no expansion plans cannot qualify for the loan if they simply want to address historical contamination issues on property they own.  As discussed below, the actual wording of the policy may provide greater flexibility.
  • Eligible Costs- assessment, demolition, remediation and consultant costs
  • Payment Term- below market interest rate over a 10 year term

Biggest Disappointment

The most disappointing aspect of the policies governing the new loan program is the requirement for redevelopment of the property.   The loan program will have a very limited appeal to only existing companies responsible for historical contamination wishing to expand. 

However, the actual wording of the policy says projects are eligible "where expansion or redevelopment is complicated by known or potential releases of hazardous substances.”  This is far more open ended that requiring a demonstration actual expansion or redevelopment will occur.

Hopefully, ODOD and OWDA will allow a more expansive interpretation of this language. Why not give the benefit of the low interest loan to companies who simply want to address historical contamination on their property?  Certainly the State could justify rewarding these "volunteers" because the policy explicitly make clear any company that is under a legal mandate (order or permit requirement) to clean their property is ineligible. 

 Policy 1.03 CERCLA Limitation for Eligible Borrowers:

Policy 1.03- Borrowers must be exempt from Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), as amended CERCLA liability for hazardous substance cleanup applications.

I don't know what "exempt from CERCLA" really means.  Is this a reference to Bona Fide Purchaser defense?  There are very few exemptions from CERCLA for companies responsible for existing contamination.  Policy 1.03 could use further clarification.

Will There Be Interest?

Whle the greater flexibility provided by the new policies make the program more attractive, it will be interesting to see whether it garners any interest.  Even with the changes, the program will appeal to a small subset of companies looking to address historical contamination.  Any other party that has no responsibliity for contamination has a far better option under the Clean Ohio program.

Ohio EPA Budget Testimony Sheds Light on New Initiatives

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.

Is the Voluntary Clean Up Program in Ohio Working?

In 1994, the State created the Voluntary Action Program (VAP) to promote voluntary clean up of industrial and commercial sites, including those currently utilized as well as brownfields.

By 1994 standards the VAP program was cutting edge.  It utilized certified professionals (CPs) who performed the investigation and implemented clean ups to meet standards established by Ohio EPA.  In this sense it was a privatized program.  Letting the company or developer ("volunteer") control the clean up process.

By allowing CPs to direct the clean ups to meet standards, costs would be reduced comparative to other clean up programs.  Rather than having sampling plans reviewed back and forth, the CP had to meet the rule.  Rather than debating appropriate remedies in documents back and forth, the CP designed the remedy and it was acceptable as long as it met VAP standards. 

There are many positive elements of the VAP program seventeen years later.  However, a look at just the numbers raises the question as to whether its enough or whether other programs need to be developed to get ahead of Ohio's growing brownfield problem. 

Here are the VAP statistics presented by Ohio EPA this winter: 

  • 422 No Further Action Letters ("NFAs") have been issued by CPs-  A NFA is the document that details the clean up meets VAP standards. 
  • 386 requests for Covenants not to Sue ("CNS")- There is no requirement that a volunteer h submit the NFA to Ohio EPA in order to obtain a CNS (the legal release)
  • 18 denied CNSs
  • 25 Withdrawn
  • 29 pending review 
  • 314 CNSs have been Issued

To summarize, to Ohio EPA's knowledge 422 NFAs have been issued by CPs in the seventeen (17) years the program has been in operation.  I say "to Ohio EPA's knowledge" because there is no requirement that you even disclose to Ohio EPA that an NFA was prepared.  In fact, many companies elect to simply obtain an NFA an never pursue the CNS from Ohio EPA due to the added administrative costs.

In seventeen (17) years, 314 sites have received a CNS, meaning Ohio EPA has verified the site meets VAP standards and issued a legal release. 

Brownfields-  Ohio Needs More Tools in its Tool Box

Focusing on brownfields, VAP is the only State tool to remove environmental legal liability with contaminated properties. (Click here for discussion of gaps in federal "AAI Rule")  To only have 314 sites addressed in 17 years has to raise the question whether we need other tools than VAP to address these sites in order to get ahead of a growing inventory of brownfield properties.

For comparison, a 1996 study identified approximately 350 brownfields and 1,000, to 2,000 condemned structures in Cleveland.  I can't imagine these number improved following the recent recession.

If you broaden out to Cuyahoga County, the Cuyahoga County Planning Commission found that 40,000 acres, or 14%, of the County’s land, has at some time been devoted to an industry that has historically been known to be a higher risk for environmental contamination.

Those are staggering figures - 314 VAP sites in 17 years versus an estimated 350 sites in Cleveland alone.  This represents only one city and one county in Ohio.  Just looking at the statistics suggests the VAP alone isn't  enough to encourage reuse of brownfields sites in the State.

Budget and Collective Bargaining Bill Impact Ohio EPA

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)

Bay Village Debates Riparian Setback Ordinance

Bay Village has been debating establishing a riparian setback for the last few years.  The proposal which began with a 75 foot setback has now been scaled down to 25 feet.  Yet the ordinance is still controversial and City Council decided to delay its vote enacting the provision.

The debate before Council was covered in the West Shore Sun:

Council took the items off the March 21 meeting agenda after hearing concerns voiced by Lake Road resident and attorney, Homer Taft... 

Taft told council he felt the proposed legislation was onerous, would impose unfair hardships on some residents, and could be found unconstitutional.

Residents near creeks wanting to make changes on their property could face thousands of dollars in additional engineering expenses, he said. In addition, some residents could find themselves facing restrictions on developing significant portions of their property.

“I believe this ordinance is unfair to property owners and rather draconian,” Taft said.

He also questioned whether the city is really obligated to pass the legislation.

“I know you are being told the EPA requires this,” Taft said. “I challenge anyone to provide written evidence that’s true.”

Riparian setback ordinances are appearing all over Northeast Ohio due to a strong push by the Northeast Ohio Areawide Coordinating Agency, local officials with Ohio EPA and the Cuyahoga Soil & Water Conservation District.  I am willing to bet that more areas are covered by riparian setback requirements in Northeast Ohio than anywhere else in Ohio.

From the article is appears there is still confusion as to whether Ohio EPA is mandating local municipalities adopt the ordinances to comply with NPDES permit requirements to control stormwater.  As discussed in a previous post, setbacks are but one option municipalities can utilize to meet their stormwater control requirements.

From an environmental standpoint do setback have value?  There is no debate setbacks have value by providing flood retention, filtering of pollutants and habitat to improve water quality.  While there are benefits, they also restrict owners ability to fully utilize their property. 

Many municipalities passed setback ordinances without really understanding what they were placing on their books.  City Councils then faced outraged citizens who complained about "no build zones" on their properties.  Some Boards of Zoning Appeals were faced with controversial variance requests to appease local citizens.  Given the controversy its a good idea that Bay Village is having a robust debate. 

 

Economic Impact of Permitting Energy Projects

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.

 

Key Lessons for Businesses from a Rare State Court Air Regulatory Decision

You don't often get State court decisions on environmental law, especially on air permitting issues.  Recently, the 10th Appellate Court in Columbus issued a decision that has at least a few major implications for businesses in Ohio.  State of Ohio ex rel Ohio Atty. Gen. v. The Shelly Holding Co, et. al.,

There is a good summary of the facts behind the case and a discussion of the legal conclusions the Court reached on the blog American College of Environmental Lawyers by longtime environmental attorney Mike Hardy.  I won't repeat the history of the case here.  Rather, let me highlight the major implications from the ruling for businesses that operate air sources within Ohio.

Ohio EPA's Permit Backlog

Up until 2008, air sources were first issued a permit to install (PTI) to construct and start-up.  Then the source had to obtain a permit to operate (PTO) for continued operation.  With nearly 70,000 regulated air sources Ohio EPA had thousands of backlogged PTO applications.

To address the issue going forward, the law was changed in June 2008 and new sources could obtain a combined PTIO permit.  This reduced the need for two permits from 2 to 1 and extended the effectiveness from five years (PTO) to ten years (PTIO). (Click here for Ohio EPA chart on difference between the programs).

This was a good fix going forward, but what about businesses who were stuck with the system that existed prior to 2008?  The Court's ruling on potential to emit (see below) shows the danger of the Agency's failure to act on a timely basis.  Shelly submitted timely applications, but was placed at a major disadvantage because the Agency failed to act on those applications on a timely basis.

Key Lesson #1:  Even if a business fulfills its obligations on a timely basis it still can be placed at a regulatory disadvantage based on the Agency's failure to act.

What is a Source's Potential to Emit

A source of air pollution (boiler, paint line, etc.) must obtain a federal permit if it exceeds certain thresholds (100/250 tons per year).  There is a huge incentive for businesses to avoid obtaining a federal permit because they impose more onerous requirements. 

In determining whether a sources exceeds federal permitting thresholds, EPA looks at its design capacity, not its actual day-to-day emissions.  Design capcity is referred to as "potential-to-emit." (PTE).

Unless enforceable restrictions exist on design capacity, PTE is calculated using worst case assumptions- source operation 7 days a week, 365 days per year and 8,760 hours per year.  Enforceable restrictions include:

  1. air pollution control equipment;
  2. restrictions on hours of operation; and/or
  3. restrictions on the type or amount of material combusted, stored or processed.

The 10th Appellate Court rejected Ohio EPA's claim that the restrictions must be federally enforceable (federal rule or permit).  The Court held state permits were deemed sufficient for purposes of enforceability.

However, it rejected Shelly's claim that voluntary restrictions were sufficient, even if those restrictions are in permit applications pending Ohio EPA review.  Until the permit is actually issued, the Court held they don't have sufficient legal effectiveness to avoid the worst case PTE calculation of 365 days a year.

Key Lesson  #2:  You can't rely on permit applications as enforceable restrictions to avoid federal permits. 

Ohio EPA's Failure to Follow the Law

Shelly was hurt by the failure of Ohio EPA act on its PTO applications.  Ohio law imposes an obligation on the Agency to issue permits within 180 days. 

The Court noted Ohio EPA failure to act on a timely basis and held that in considering penalties Ohio EPA failure to act "should not be held against the owner or operator."    An interesting sentence in the ruling-  "After the 180-day deadline passed, the burden falls on Ohio EPA to meet its obligation under law; and owner cannot be penalized for the Ohio EPA's failure."

I can envision that sentence being quoted in future briefs by lawyers whose clients may face penalties partially as a result of Ohio EPA failure to perform its mandated functions on time.

Key Lesson #3:  Don't forget Ohio EPA has legal obligations.  Their failure to meet those obligations could be a basis for a legal defense.

Stack Testing to Determine Compliance

Stack tests are samples of air emissions what a source is operating.  The accuracy of stack tests to determine whether a source is in compliance with its emission standards in a permit has been long debated. 

Businesses have argued that stack tests don't represent normal conditions and are only "a snap shot in time."  Regulators argue that stack tests are a valid way of determining compliance.  Until a source passes a stack test (emissions are within limits), the assumption is the source is operating out of compliance with permit standards and subject to penalties.  Any associated penalties should be based on the time from the failed stack test until the source passes a subsequent stack test.

Key Lesson #4:  To avoid large civil penalties, business should act very quickly to make adjustments following a failed stack test.

 

Reorganization of Ohio EPA Underway

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.

JobsOhio and Clean Ohio

The Governor's top legislative priority is the privatization of the State's economic development functions.  House Bill 1, known as "JobsOhio", has been introduced and a vote in the Senate may come yet this week. 

The Ohio Department of Development (ODOD) plays a critical role in the administration of the Clean Ohio program which provides millions in grants for brownfield redevelopment.  The Department's current role includes the following:

  • Review for Clean Ohio grant applications for completeness;
  • With the assistance of Ohio EPA, makes eligibility determinations;
  • Meets with applicants to discuss projects (known as "PRAMs");
  • Selects which projects will receive Clean Ohio Assistance Fund (COAF) funding which has recently become Phase II assessment grants;
  • Assists the Clean Ohio Council in evaluating projects for Clean Ohio Revitalization Fund (CORF) funding for clean up; and
  • Determines which projects can be reimbursed with grant funds.

On the brownfield projects I work on, the ODOD personnel are the key point of contact when evaluating projects and through out implementation of the project.  More than once, ODOD personnel have made absolutely critical decisions that impact the viability of projects or have made significant reimbursement decisions that cost  developers hundreds of thousands of dollars. 

With the privatization of economic development functions, ODOD's key role will almost certainly be absorbed by another state agency.  Most likely, Ohio EPA will pick up these functions, but its possible the functions could stay with the newly created non-profit corporate entity.

How far away are we from that transition? House Bill 1 is only the first step in privatization of the Ohio Department of Development and the associated transfer of existing functions to other state agencies.  The bill basically establishes the non-profit corporation to be known as JobsOhio.  The Bill then calls for a six month consultation process to evaluate transition of the other functions of ODOD. 

Here is the relevant section of H.B. 1:

Sec. 187.05. The director of development, as soon as
practical after the effective date of this section, shall, in
consultation with the governor, evaluate all powers, functions,
and duties of the department. Within six months after that
effective date, the director shall submit a report to the general
assembly recommending statutory changes necessary to improve the
functioning and efficiency of the department and to transfer
specified powers, functions, and duties of the department to other
existing agencies of the state or to JobsOhio, or eliminate
specified powers, functions, or duties
. The recommendations shall
be submitted in writing to the speaker and minority leader of the
house of representatives and the president and minority leader of
the senate.

After submitting the report, the director, in consultation
with the governor, shall continue to evaluate the department and
make additional recommendations on such matters to the general
assembly.

We are probably at least a year away from seeing any of ODOD's responsibilities transition to other agencies or to the JobsOhio entity.  For now it will be the status quo.  But in the near future a crucial decision will be made as to who will administer ODOD's critical Clean Ohio responsibilities.

Ohio Bill Introduced to Give Tax Credit for Site Remediation

The Ohio House has introduced a bill that would provide a tax incentive to clean up contaminated properties.  House Bill 10, if enacted, would provide an exemption from penalties as well as a tax credit to encourage companies to voluntarily remediate property.

Similar to other existing tax incentives, the bill encourages companies to remediate property under Ohio's Voluntary Action Program (VAP).  As discussed in my previous post, the VAP offers a much better option for addressing historical contamination on-site than traditional environmental clean up programs such as CERCLA.

One Year Exemption from Penalties

The bill as introduced, would provide any person or company to which a covenant not to sue (CNS) under the VAP was issued, a one year exemption from any fees or civil or administrative penalties that would be imposed under any environmental law. 

The bill is vague as to how the exemption would operate in practice.  For example, does it exempt penalties associated with violations that occur in that one year period? Or does it exempt the company from any and all violations, including historical violations, if an action is brought during the year following the CNS?

The other component that will likely be tweaked once the bill goes through hearings is the broad nature of the exemption.  It would exempt a company from all penalties, even those totally unrelated to the clean up of the property.

Tax Exemption for Site Remediation Costs

The exemption would cover remediation costs to clean up vacant land as well as property returned to commercial or industrial use.  The tax credit essentially doubles if the property is used for "productive use" which is defined as any trade or business. 

The tax credit applies to the commercial activity tax or the applicable income tax.   The credit would not apply (expire) to any remediation expenditures paid or incurred for a VAP clean up initiated after December 31, 2017.  A VAP is deemed "initiated" if a Phase I is performed.

Conclusion

Any tax exemption is going to be monumentally difficult to pass when the State of Ohio faces a $8 billion dollar budget deficit.  So, the prospects of this bill may not be bright. 

The bill's goal of spurring voluntary clean ups at industrial properties is admirable.  After the recent financial crisis, Ohio and the entire Midwest saw exponential growth in abandoned properties with contamination.  Creating incentives to address these properties is good for the State.

However, rather than a tax credit for remediation costs it may be a more prudent approach to look at expanding the tax exemption for new development on brownfields. (See prior post discussing issues with current brownfield exemption).   The tax impact on revenues would be less dramatic and even could be neutral.

Regardless, it is good to see Legislative policy debate regarding more incentives for voluntary remediations and brownfield redevelopment.  After the financial crisis, Ohio needs to get much more proactive to address its ever expanding portfolio of brownfield properties.

Ohio Revamps Brownfield Loan Program

The Ohio Water Development Authority (OWDA) has long had a revolving loan fund to help finance brownfield clean up projects.  However, the OWDA program has rarely been utilized because of two factors:

  • Clean Ohio Program-  Offers grants up to $3 million for clean up and remediation of sites (i.e. why take a loan when there is significant grant money available?)
  • Non-competitive interest rates

At this week's Ohio Brownfield Conference, the State announced that they soon would be revamping the OWDA program to make it more attractive.  The two major changes to be made are:

  1. Responsible Parties-  OWDA will allow companies that have legal responsibility for contamination to be eligible for loans so long as the company is not under enforcement orders. Responsible parties (PRPs) are not eligible for Clean Ohio or other federal grant funding.
  2. Competitive Interest Rates-  The State did not announce the exact interest rate.  They simply stated the the new rates would be competitive.

The biggest change is allowing responsible parties to be eligible for loans.  Now companies have a new financing option if they want to address historical contamination on their property to eliminate liability risks.  Companies can utilize the Ohio Voluntary Action Program (VAP) in performing their clean up.

Clean up under VAP is a far better option than clean up under traditional enforcement or regulatory programs like RCRA (hazardous waste regulatory program).  VAP clean ups are:

  • Cheaper- the program allows use of institutional (i.e. deed restrictions) and engineering controls (physical barriers) as an alternative to more costly removal/disposal of contamination
  • Companies have much more flexibility in how to perform their clean up-
    • Residential versus industrial/commercial standards can be selected
    • Buildings and parking lots can be used to contain contamination versus digging and hauling material off-site
    • Companies private environmental consultant oversees the clean up and selects remedies versus the regulator

The OWDA program may provided needed financing to companies wishing to take advantage of the VAP program.

We will need to see the details for the changes to the program once the State rolls them out.  I was told that would occur in the next few weeks.  However, these changes appear to make the OWDA Brownfield Loan Program much more attractive.

(See extended entry for the current program guidelines which will soon be changed)

WHAT: Brownfield Program

For WHAT:

LOANS for Planning/Design and/or Construction of Brownfield site remediation

WHY:

To clean up contaminated property, especially in urban areas through direct loans or credit

(Purpose)

enhancement.

By WHOM:

Administered by: OWDA

Funded by: OWDA Brownfield Fund (under LED) from OWDA Revenue Bonds Surplus

 

Local Government Agencies (Cities, Villages, Counties) that have:

1. Plans designed by certified professionals;

2. Plan approval by OEPA;

3. Demonstration of revenues adequate to meet annual loan repayments.

And Private Entities that have:

1. A VAP certified engineer directing the remediation effort;

2. Financial strength analysis;

3. Real estate appraisal;

4. Evaluation of potential effectiveness of remediation.

HOW MUCH:

Max Construction Loan: No max

Eligible Costs: Engineering & design fees, construction costs, legal and inspection fees

Application Fee: $2,500 (May be credited to Loan Fee)

Loan Fee: .35% (.0035) of total estimated project, processing and closing costs OR $400 for loans up to $100 million; .00175% for loans between $100 million to $150 million; capped at $150 million

Contract

Interest Rate: Based on the higher of the comparable Treasury Note Rate or the comparable MMD AAA scale, plus 50 basis points

Rate Discounts: NA

Capitalized

Interest Rate: Same % as Contract Interest Rate; Accrues on portion of loan disbursed, until 6 months prior to the Loan Maturity Date

Retainage: 8% of first 50% of labor until project is substantially completed (as defined by the community), for all communities except home-rule, on Construction Loans only

Planning/Design

Repayment Rate: Balloon payment at maturity, if no prior repayment made

Construction

Repayment Rate: Varies by loan

Late Pmt Penalty: Greater of: 10% of amount overdue OR $25 minimum

Default Rate: Greater of: Contract Interest Rate + 300 basis points (3%) OR 16%

Loan Amount: Max Planning/Design Loan: $500,000

HOW LONG:

Planning/Design Loan: Min: None Max: 5 years

(Contract Term)

Construction Loan: Min: None Max: None

WHEN:

Loan Fee: Due when the Loan Agreement is executed

Repaymt Invoice: Mailed approximately every May 15 and Nov 15 by OWDA to loan recipients

Planning/Design

Loan Repayment: Begins earlier of: 5 years, OR at the time remediation begins (May be rolled into subsequent Construction loan)

Construction

Loan Repayment: Negotiated between OWDA and borrower at the time the loan is made

Application: Due 15th of the month

WHERE:

Disbursement request: OWDA Chief Engineer

Repayment to: OWDA Accounting Dept

Application from and to: OWDA Chief Loan Officer

HOW:

To Apply the Borrower must:

1. Fill out and submit application form with supporting documents as listed on the application.

2. Meet with OWDA to negotiate loan terms.

For Cooperative Agreement approval the Borrower must:

1. Receive bids and tentatively approve contract awards.

2. Pass legislation authorizing signing of the Cooperative Agreement.

3. Complete any necessary assessment, tap-in and/or rate legislation.

4. Prepare a Projection schedule of revenues, debt service obligations, and operation and

maintenance costs, over the contract term of years repayments are to be made to OWDA.

For Disbursement of loan funds the Borrower must:

1. Fill out Loan Payment Request form and send with supporting contractors’ documentation.

For WHOM:

Ruling Highlights Benefits of Recent Legislative Changes to Permit Status During Appeal

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.

 

 

Congress Attempts to Block EPA GHG Power; Ohio Moves Forward

As discussed in the Wall Street Journal, it didn't take long before a flurry of bills were introduced in Congress to stop EPA from moving forward with its controversial greenhouse gas (GHGs) regulations.  After passage of the deal to extend Bush era tax cuts, halting EPA efforts is seen as the next major action needed to continue the nation's economic recovery.

All the bills are aimed at either stripping or delaying EPA's ability to regulate GHGs under the Clean Air Act.  Here is a summary from the Wall Street Journal:

It has been just one day since the start of the new Congress and lawmakers have already introduced at least four bills to cripple or altogether block the administration from working on greenhouse-gas standards.

Sen. Jay Rockefeller (D., W.Va.) got the ball rolling in the U.S. Senate Thursday with a bill that prevents the Environmental Protection Agency from enforcing its greenhouse-gas requirements for two years.

Meanwhile, in the House, Marsha Blackburn (R., Tenn.) proposed a bill Wednesday that blocks the EPA from regulating carbon dioxide and other greenhouse-gas emissions under the Clean Air Act.

Rep. Ted Poe (R., Texas) introduced legislation that same day that prevents the EPA from receiving funding for any type of cap-and-trade program for greenhouse gases.

On Thursday, Rep. Shelley Moore Capitol (R., W.Va.) announced a bill to suspend the EPA's work on greenhouse gases for two years.

Ohio Signs Emergency Rules to Prevent Regulation of Small Sources

While Congress tries to block EPA, Ohio has moved forward with implementation of the EPA rules at the State level.  On December 30th, Governor Strickland signed emergency rules which will be effective for 90 days to essentially adopt U.S. EPA's Tailoring Rule.  The Tailoring Rule raises the trigger level for federal permitting as a result of GHG emissions from levels in the Clean Air Act of 100/250 tons per year to 75,000 tons per year for GHGs.

Strickland and Governor-Elect John Kasich received letters of support for this rule package from major Ohio employers, such as: Ohio Chemistry Technology Council, Procter & Gamble, BASF Chemical Company, Lubrizol, AEP, INEOS ABS Corp., GFS Chemicals, Capital Resin Corporation, Americas Styrenics, Dover Chemical Corp., and ISP. 

By enacting the rules, the trigger threshold has been raised so that only very large sources of GHGs face the new permitting requirements.  Without the rules, Ohio would arguably have had more stringent standards and could potentially have required to seek federal permits from thousands of sources.

To read the executive order, emergency rules or the industry support letters click here.

Kasich Names New Directors for Ohio EPA and ODNR

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. 

Curious Timing: Ohio EPA Re-Releases Massive Water Quality Rule Package

On December 17th, Ohio EPA re-issued a huge set of rules that impact industry, developers and the farming community.  The surface water quality rule package includes interrelated sets of rules dealing with the following areas of regulation:

  • Stream Mitigation-   Contains an entirely new proposal for how to determine the amount of mitigation required for stream impacts.
  • Section 401 Water Quality Certifications-  Creates an entirely new permit for "isolated stream" (streams that fall outside of federal jurisdiction under Section 404 of the Clean Water Act).
  • Antidegredation-  sets standards for reviewing any impacts that would lower water quality.
  • Water Quality Standards-  establishes new standards for wastewater discharges and other water quality impacts.

The Agency had originally released three of the packages (all except stream mitigation) back in the fall of 2008 (Click here for 2008 post).  In 2008, the rules were deemed highly controversial.  Some industry groups described the package as the largest overhaul of water quality rules in thirty years.

Curious Timing for Re-Release

After a flurry of activity in 2008, the rules were essentially shelved for almost two years.  Ohio EPA made the decision to try and move forward with some of the less controversial components independently. 

Now, the entire package is being re-released with the stream mitigation proposal included.  The Agency has established a public comment deadline of March 8, 2011. 

The Agency's decision to release these rules in late December a few weeks after the election and a few weeks prior to Governor Kasich being sworn in can only be described as curious.  Following the election, Director Korleski submitted his resignation and Governor Kasich has yet to announce a new Director of Ohio EPA.  It is quite possible a new Director could not be named until after March 8, 2011. 

Any new Director will almost certainly want to review, in detail, this massive rule package and understand the issues.  Given this uncertainty why release the rule package now and set an aggressive deadline for public comments?  In my mind, it only sets the stage for the rules to be pulled once again to allow for complete analysis by the new leadership team.

Ohio EPA + ODNR?

 

 

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.

Michigan was the latest State to combine- pulling together its Dept. of Natural Resources and Department of Environmental Quality.  Governor Granholm attributed the basis of the change to the unprecedented economic funding challenges facing State government. 

Michigan has an interesting history.  Fifteen years ago it decided to break apart the regulatory from the outdoor recreation functions.  Now its combining them back together again.   Not everyone was a fan of recombining the Agencies.  This from a Michigan newspaper story reporting on the proposal to combine DEQ with Natural Resources:

Russ Harding, who was the first DEQ director when it was formed in 1995 under then-Gov. John Engler, said that recombining the agencies will save far less than $2 million because it may only involve the elimination of a couple of top administrative positions.

Harding, who was one of three people that wrote the executive order the split the DNR and DEQ, said the division was intended to separate regulatory programs into a distinct department.

From a budgetary point of view, Harding, who now works for the Mackinaw Center free market public policy think tank, said that merging the departments is just “rearranging deck chairs.”

Harding said he’s been critical of plans to recombine the departments because of concerns that it could lead to increased hassles for those seeking permits.

In 2009, the State of Washington was the latest State to review combining environmental regulatory functions. A comprehensive report was issued that looked at national trends in dividing up environmental regulatory responsibility within State governments. This was taken from the introduction of the report that examined the proposal:

When Governor Chris Gregoire delivered her second inaugural address, she asserted that state government needs to rethink the way it delivers programs and services. This document begins a public dialogue on reforming Washington State’s work in natural resources.

The impetus for having these conversations now is the recognition that these are unprecedented economic times, and that natural resource agencies, as well as its many partners, cannot ride out the recession and then revert to business as usual. Instead, the Governor challenged state officials to use this crisis to make hard decisions that increase efficiencies and reduce costs. In this environment, we must seize the opportunity to reform so we can respond to the evolving needs of this century. This is the state’s moment to improve customer service and reform state government.

Washington's combination of agencies at this point is only virtual.  It has created a single website- "One Front Door to Washington's Outdoors"-  to access all information regarding environmental regulation and natural resources.   

Overview of Other State Government Structures

Single Agency Structure: 

Rhode Island is the only state that has its natural resources, environmental protection and agricultural authorities combined into a single agency. 

However, in an interesting twist on combining agencies, Massachusetts created the Executive Office of Energy and Environmental Affairs.  The Executive Offices provides overall management to several Departments- Department of Agricultural Resources, Department of Conservation and Recreation, Department of Environmental Protection, the Department of Energy Resources, Department of Fish and Game and Department of Utilities. 

Two Agency Structure: 

Ten states have combined their basic natural resources functions with environmental protection into a single agency.  Each has a separate Agricultural department.

  • Michigan:  Department of Natural Resources and Environment
  • Connecticut: Department of Environmental Protection
  • Delaware: Department of Natural Resources and Environmental Control
  • Georgia:  Department of Natural Resources
  • Iowa: Department of Natural Resources
  • Kentucky:  The Energy and Environment Cabinet
  • Massachusetts:  Executive Office of Energy and Environmental Affairs
  • New Jersey:  Department of Environmental Protection
  • New York:  Department of Environmental Conservation
  • North Carolina:  Department of Environment and Natural Resources
  • Vermont:  Vermont Agency of Natural Resources
  • Wisconsin:  Department of Natural Resources

Three-Agency Structures

At least nine states operate under a three-agency structure (natural resources, environment and agriculture).

  • California:  Natural Resource Agency, Environmental Protection Agency
  • Colorado:  Department of Natural Resources, Environmental Protection Agency
  • Illinois:  Department of Natural Resources, Environmental Protection Agency
  • Indiana:  Department of Environment, Department of Natural Resources
  • Maryland:  Department of Environment, Department of Natural Resources
  • Minnesota:  Department of Natural Resources, Pollution Control Agency
  • Missouri:  Department of Natural Resources, Pollution Control Agency
  • Ohio:  Environmental Protection Agency, Department of Natural Resources
  • Utah:  Environmental Quality Agency, Department of Natural Resources

 

Are Local Government's Mandated to Adopt Riparian Setbacks

Northeast Ohio has led the state in the adoption of ordinances that establish setback requirements from streams and wetlands.  Buried within municipal codes is the requirement to stay out of buffer areas surrounding streams and wetlands. 

Homeowners, businesses and developers often learn of these requirements after they go to the City with their designs for additions, expansions or subdivisions. 

There is a lot of misinformation as to whether cities are required to adopt these ordinances.  Some municipalities are telling citizens and developers they were mandated by Ohio EPA to adopt them. While there was a very big effort to try and push adoption of these ordinances, let's be clear, there is no legal mandate in Ohio at this time to adopt them. 

The two most common model ordinance that many municipalities have adopted are either the Northeast Ohio Storm Water Task Force and Chagrin River Watershed Partners model ordinances.  (The Chagrin River Watershed Partners website provide very good information regarding riparian setbacks and their purpose.)

What are municipalities required to do to control stormwater?

The legal requirement for local governments to adopt various stormwater control ordinances stems from Ohio EPA's implementation of the MS4 program (Small Municipal Separate Storm Sewer Systems).  Each local government that has ownership and control over an MS4 is required to develop a Stormwater Management Program (SWMP).  There are certain required elements of the SWMP, including the adoption of certain storm water ordinances, including:

  • Pre-construction stormwater controls
  • Post-construction stormwater controls
  • Illicit discharge, detection and elimination
  • Erosion and sediment controls

As part of the post-construction stormwater program, the municipality must include information on any non-structural stormwater requirements it has imposed.  One possible non-structural stormwater control technique can be wetland and stream setbacks (buffers). 

Where are Ohio EPA's legal requirements specified?

Ohio EPA's NPDES General Permit for the MS4 program permit (Permit #OHQ000002) only requires a rational statement that discusses what non-structural BMPs were selected, including BMPs designed to protect riparian areas and buffers protecting sensitive water bodies. See, Section III.B.5.e.iii of Permit #OHQ00002. Ohio EPA's permit  does not require the MS4 community to adopt riparian setbacks.

OAC Chapter 3745-39, which establishes the minimum regulatory requirements for MS4 program, does not mandate adoption of setbacks. It only discusses setbacks as one option for implementing non-structural stormwater controls. Ohio EPA's comment below the regulation establishing minimum requirements for MS4 communities:

Non-structural best management practices are preventative actions that involve management and source controls such as: policies and ordinances that provide requirements and standards to direct growth to identified areas, protect sensitive areas such as wetlands and riparian areas, maintain or increase open space (including a dedicated funding source for open space acquisition), provide buffers along sensitive water bodies, minimize impervious surfaces, and minimize disturbance of soils and vegetation; policies or ordinances that encourage infill development in higher density urban areas, and areas with existing infrastructure; education programs for developers and the public about project designs that minimize water quality impacts; and measures such as minimization of per cent impervious area after development and minimization of directly connected impervious areas.

In other words, communities are free to consider a mix of non-structural controls which could include riparian setbacks.

What about distances of setbacks?

Model ordinances have between 25 - 300 feet as required buffers.  Does Ohio EPA mandate a specific distance?  No.

Ohio EPA has only included setbacks in a couple NPDES General Permits for specific sensitive water bodies (the Big Darby and the Olentangy). Here is the requirement from the Big Darby general construction stormwater permit:

The stream setback corridor (calculated using one of the methods in Part III.G.2.b of this permit) consists of up to 3 zones.  Zone 1 extends from 0 to 25 feet from the stream edge. Zone 2 extends from 25 to 100 feet from the stream edge, and Zone 3 extends from 100 feet to the outer edge of the setback corridor.

There is a formula for determining the stream setback corridor.  Then the Agency divides up the setback area into three zones.  Each zone has its own mitigation requirements.

While Ohio EPA has selected two sensitive rivers to mandate riparian setbacks, it is still not determined a minimum setback distance.  The NPDES General Permit for the MS4 program does not establish a minimum setback distance if a community elects to utilize this non-structural BMP.

OAC Chapter 3745-39 does not contain a rule specifying minimum distances for riparian or wetland setbacks. 

(For more information on the purpose of Riparian Setbacks, click here)

US EPA Attempts to Ease Transition to Greenhouse Gas Regulation for Large Sources

On August 12th, the U.S .EPA released two proposed rules to address the potential gap that exists while States adopt rules to regulate greenhouse gases (GHGs) from large stationary sources. What U.S. EPA is really doing is making sure all fifty states will be regulating GHGs beginning January 2011.

On May 12, 2010, U.S. EPA finalized its controversial Tailoring Rule, which raised the trigger level for federal permitting associated with GHG emissions.  Unless the U.S. EPA raised the trigger levels from 100/250 tons per year, very small sources would have required federal permits. The Tailoring Rule is U.S. EPA's attempt to phase in GHG, beginning with only very large sources.

Beginning 2011, very large stationary sources of GHGs (like power plants and oil refineries) will need to address GHGs emissions when seeking permits for expansion or new facilities. For the first time, these sources will need to meet Best Available Control Technology (BACT) standards under the Agency's New Source Review Program to control or reduce GHG emissions.

Thirty-Seven (37) states, including Ohio, operate U.S. EPA approved air permitting programs.  State approved programs cannot be "less stringent" than U.S. EPA regulations.  Therefore, when U.S. EPA adopts new standards, States are required to incorporate those standards into their programs. 

However, each State has its own rulemaking process.  U.S. EPA recognized that some states may not be able to complete the rulemaking process to incorporate GHG regulations prior to 2011. Therefore, the August 12th proposal is EPA's attempt to create a backstop rule should states fail to complete their rulemaking process.  The backstop is referred to as a "federal implementation plan" or FIP.  It really means U.S. EPA would temporarily take over permitting functions for sources above the GHG trigger levels in the Tailoring Rule. 

Ohio doesn't like the prospect of U.S. EPA imposing the FIP.  If the FIP is imposed U.S. EPA would temporarily issue PSD permits in Ohio until the State finalizes its rules.  Ohio has released its proposed modifications to incorporate the Tailoring Rule into Ohio EPA's regulations to try and avoid U.S. EPA direct involvement in its permitting program.
 

Changes to Clean Ohio Policies Impact Brownfield Projects

The administration of the Clean Ohio program is largely governed by the policies developed by the Clean Ohio Council. Separate policies have been generated for the Clean Ohio Assistance Fund (COAF) and the Clean Ohio Revitalization Fund (CORF).

Over the life of the Clean Ohio program, the Clean Ohio Council has routinely updated the program policies to address issues and provide additional clarification to applicants. The policies govern critical components of the brownfield grant program including eligibility, evaluation of projects and administration of grants.

The policies are used as a mechanism to address many of the more common issues that arise and to modify the program. Every brownfield project is different and on most Clean Ohio projects issues will arise that are unique to that project or that are not clearly addressed by the policies. However, it is important to pay attention any time the Council updates their policies.

On March 19, 2010, the Clean Ohio Council approved changes to the policies that govern projects seeking funding under the Clean Ohio Revitalization Fund (CORF). CORF funding is awarded on a competitive basis semi-annually by the Clean Ohio Council. The new policies were placed on the Clean Ohio web page today and are effective immediately.

An Ohio EPA newsletter states the changes were made based upon recommendations received from the Ohio Department of Development (ODOD), Ohio EPA, grantees and other interested parties. While the changes do adjust some of the administrative procedures, there are no changes on the scale of past policy updates. Prior changes included creation of the Redevelopment Ready Track and the addition of extensive conflict of interest provisions.

Here is a quick summary of the changes made:

Eligible Grant Costs- Costs incurred responding to Ohio EPA comments are now eligible. However, costs associated with re-issuance of a No Further Action letter are not eligible. Clarification was provided that costs incurred in preparing an application are not eligible.
 

Clarification of Eligible Infrastructure Work- To be eligible as match, infrastructure work must be performed on or at the project property. Infrastructure work used as match must be completed prior the end of the grant. The 10% limit on use of grant funds for infrastructure costs was maintained. A new definition of what constitutes “infrastructure” was added which states:

            o “Infrastructure” means technical structures that support society, including but not limited to roads, bridges, water supply, sewers, power grids, and telecommunications, but excludes vertical structures, such as buildings and parking garages. The exclusion of buildings and parking garages is the most important clarification of this added definition.
 

Requires a Project Resource and Advisory Meeting (PRAM)- The PRAM meeting includes ODOD and Ohio EPA at the Site. This is where any issues identified with the clean up or proposed project can be discussed early on with the State Agencies. While these meetings have been routine, the policy update makes clear that the meeting is mandatory and must be conducted prior to placing the grant application in the library for public comment.
 

• Integrated Rankings- Under the policy revisions, if an Integrating Committee ranks multiple projects, and a project is withdrawn prior to the Clean Ohio Council award meeting, lower ranked projects will move up in ranking. This is an important change because projects do routinely drop out of the process and some areas of the state (including Cleveland) typically have multiple projects submitted. The Integrated Committee related points are crucial you’re your application is in a competitive grant round.
 

Initiation and Completion of the Project- New requirements were added regarding funding projects. Applicants are not required to open a Technical Assistance Account with Ohio EPA within 60 days of grant award. These accounts are used to discuss clean up issues with Ohio EPA. Work must commence on site within 12 months of the effective date of the grant agreement. Finally, projects must be completed within 48 months (including issuance of the Covenant Not to Sue by Ohio EPA) of the date the grant contract is executed.


 

Five Tips to Help Reduce the Risk of EPA Enforcement Actions

I have been on all sides of the fence relative to environmental enforcement actions.  I have represented the State, managed Ohio EPA enforcement program and now I represent companies who find themselves the subject of enforcement.  These experiences have given me valuable insight into what things to do and not to do when dealing with compliance oversight.

When speaking on the topic of enforcement, I am asked to provide practical advice on how to reduce the chances that your business will be a target of EPA enforcement.  In this post I provide five tips regarding your early interactions with EPA.

Much of my advice may be viewed as simple common sense.  However, I am consistently surprised how many times companies don't follow these simple steps. 

Relationship with Inspector-

Most inspectors are assigned a Division (air, water, hazardous waste, etc.) and a geographic territory.  This means you are likely to see this same person again and again at your facility. 

  • If possible, try and develop a good relationship with the inspector.  Cooperation at this lowest level can often prevent communication issues that sometimes lead to enforcement. 
  • Also, while not true in all cases, developing a good reputation with inspector assigned to your facility may lead to additional flexibility when addressing Agency concerns or issues.
    • Ask yourself-  Which report or permit application will get more scrutiny- one submitted by a company with a good reputation/relationship or a bad one....

The EPA Inspection- 

The Agency has the ability to perform both announced and unannounced inspections of your facility.  It is understandable that companies are frustrated by the disruption that an EPA inspection causes at their facility.  Just don't let that frustration carry over to your interactions with the inspector. 

  • Listen closely to the inspector- Accompany them during the inspection. If they point out concerns that can easily be addressed, fix them. Also, follow up in writing telling the inspector what you have done. EPA appreciates pro-active companies who listen and respond to Agency concerns. This can go a long way toward establishing a good reputation.
  • Debrief with the inspector- Don't be shy about asking for an oral report of the inspector's findings during or after the inspection. Take notes of any concerns or requests for information made by the inspector. Then follow up if possible. Don't wait for the inspector to provide a letter if you can easily address some of the issues.  If you are able to provide information not available during the inspection that demonstrates compliance, you may avoid seeing these issues in a formal notice or letter from EPA.

Respond to Requests for Information or Notice of Violations

If you receive a notice of violation (NOV) or a request for information, respond within the time frame requested or write and ask for additional time.  ALWAYS WRITE A RESPONSE.  It is far better to write a letter formally disputing findings, then to not respond at all. 

  • Silence will quickly lead to more NOVs and escalated enforcement.  Companies have learned time and again, simply ignoring the situation will not make it go away.  Also, the higher you go up the enforcement chain the more likely you will see a demand for civil penalties.

In the Early Stages of Interaction Involve an Attorney to Help Respond-

This may come across as a blatant advertisement, but its not intended as one.  The fact of the matter is the difficult compliance issues often arise due to the complexity of the environmental regulations. 

  • How your respond or what information you choose to provide in this early stage can significantly impact the likelihood or severity of escalated enforcement.  Make sure you are putting your company in the best defensive position possible, particularly on issues that carry significant risk of liability.

Try and Resolve Issues at Lowest Level Possible-

A common reaction of companies who find themselves in a major disagreement with EPA or subject to enforcement, is the to call senior management and complain.  Some may think if they just get management involved they will see it their way and the issued will be resolved. 

  • Due to the number of issues that arise, senior manager constantly push decision making down to the lowest possible level.  Usually the first question you will get when you call is "have you talked through these issues with staff assigned?"   Even if you don't hear that question, the first thing they will do when the hang up the phone is to call the inspector to hear "their side of the story." 
  • Remember, you are trying to build a relationship with your inspector.  It is human nature to not like it when someone tries to "go over your head."  Sometimes the situation demands such action be taken, but be prudent when choosing to utilize that option.

Of course every situation is different.  The five pieces of practical advice are meant to be general guidelines on conduct rather than legal insight.  The more significant the dispute or compliance issue, the more cautious you should be in your interactions with the Agency.  Hire a good supporting team to assist on those issues. 

 

E-Waste Recycling Legislation Introduced in Ohio

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.

Recycling Rates E-Waste
Product Units Disposed Trashed Recycled Recycle Rate
T.Vs 26.9  million 20.6 6.3 18%
Computers 205.5 million 157.3 48.2 18%
Cell Phones 140.3 million 126.3 14 10%

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. 

 

Ohio EPA Restarts Issuance of Air Permits Following Federal Ruling

Today, Ohio EPA released its response to the federal court ruling which struck down the exemption from BAT for sources that emit less than 10 tons per year.  The memo makes clear that it supplants the February 2nd e-mail instructing staff to not issue air permits until the ruling was evaluated. 

There are few surprises in the memo.  It basically states sources will have to go back to case-by-case BAT evaluations.  This was what Senate Bill 265 was designed to eliminate.  Therefore, three years after passage of the bill the status quo remains. 

The memo also says Ohio EPA has supplied some information to U.S. EPA to support the rule exempting sources less than 10 tons per year.  However, U.S. EPA requested additional information which it could not supply due to staffing shortages.  The memo contains no discussion of what has been supplied or what additional information is going to be collected. 

The memo also points out that there may be instances when sources less than 10 tons per year have more stringent regulations than sources greater than 10 tons per year.  I don't anyone anticipated that outcome three years after passage of Senate Bill 265.

Also, notably absent is any discussion of the status of air permits that were issued over the last three years without BAT in accordance with the exemption. The memo only states that Ohio EPA has yet to make a decision as whether to go back and re-issue these permits.  Businesses holding these permits received no word as to whether they are still considered valid or subject to potential federal enforcement. 

Three Years After Major Reforms- Ohio's Air Permitting Process is Anything But Certain

Major uncertainty surrounds Ohio's air permtting program.   I use the term "certainty" because that was the buzz word utilized when business groups fought hard for major reforms that eventually were passed in Senate Bill 265 in 2006. 

Back in 2006, business groups were concerned that  Ohio's system for issuing air permits was far more onerous and unpredictable than other states.  The focus of attention was the requirement to install Best Available Technology (BAT) on smaller sources of air pollution.  

Business groups complained BAT was imposed on an "ad-hoc" case-by-case basis.  Individual permit reviewers could develop inconsistent determinations as what constituted BAT on same or similar sources.  The goal was to get away from this uncertain application of BAT.

The two major reforms secured in Senate Bill 265:

  1. All sources less than 10 tons per year (tpy) were no longer required to install BAT
  2. For all sources larger than 10 tpy, Ohio EPA could only require BAT through rulemaking that defined BAT consistent with elements set forth in S.B. 265.  It was contemplated the rules would spell out the requirements for various source categories.  Thus, providing certainty by avoiding case-by-case determinations of BAT.

What is the status of air permitting in Ohio three years after passage of these reforms? 

  • Business have far less certainty regarding Ohio's permitting process than they did three years ago (prior to S.B. 265)
  • Businesses are caught in a stalemate between U.S. EPA and Ohio EPA that could subject them to federal enforcement and make their permits invalid
  • Ohio businesses are no closer to avoiding case-by-case BAT decisions as they were three years ago
  • In some cases, businesses will take longer to get their permits and still have the same level of required controls
  • The two major reforms (the less than 10 tpy exemption and BAT through rulemaking for larger sources) will never be implemented unless hard choices are made.

To preserve the two major reforms, means facing the reality that federal law requires Ohio demonstrate the changes are valid. How does Ohio demonstrate validity?

  1. Ohio EPA would have to quantify the lost reductions from "weakening" the BAT requirement (something Ohio EPA hasn't done in three years).
  2. The business community will have to help direct the Agency in identifying new air pollution control programs that can be used to offset the lost reductions attributable to BAT.

Less Than 10 TPY Exemption

My last post discussed the recent federal court ruling which determined the exemption from installing BAT for sources smaller than 10 tpy was inconsistent with federal law.  The Court found Ohio EPA failed to properly revise its State Implementation Plan (SIP- the State plan for how it will meet federal air quality standards).

At issue, was a prohibition contained in the Clean Air Act called "anti-backsliding."  In essence, if a state is going to reduce air pollution requirements on one set of sources it must make up for lost reductions by imposing more stringent controls someplace else.

The response to the Court decision by some business groups is to urge Ohio EPA to appeal the Magistrate's decision.  This from the Ohio Manufacturer Association (OMA) Web page regarding the decision:

The OMA is urging the Ohio EPA to mount a vigorous defense of this common sense regulatory reform through all available legal channels.

However, even if the Agency successfully challenged the Magistrate's decision on appeal, I don't see how this fixes things for the business community. At issue in the Magistrate's decision was a Citizen Group's rights to challenge a State's implementation of its SIP- Ohio's air pollution control plan.  

Regardless of the Citizen's suit, U.S. EPA has already put Ohio EPA on notice that it believes the less than 10 tpy BAT exemption is inconsistent with federal law.  U.S. EPA sent a letter back on June 5, 2008 that it could not approve Ohio's attempt to provide the 10 TPY exemption

Without U.S. EPA approval, all permits issued without BAT due to the state exemption could be deemed to violate federal law.  All those businesses holding those permits could be subject to federal enforcement action or their permits determined invalid. 

A win on appeal barring the Citizen Group from challenging Ohio EPA isn't truly a fix.  The harsh reality is the only way to fix things for the business community is for Ohio to make an approvable submittal to U.S. EPA.  To be approvable, Ohio will have to demonstrate their reforms don't violate "anti-backsliding."

To make such a demonstration, Ohio EPA must quantify the lost reductions attributable to the 10 TPY exemption- something I don't believe Ohio EPA has done in the three years since passage of S.B. 265.  After Ohio EPA quantifies the difference, it will have to work with the business community to come up with replacement controls to make up for the lost reductions. 

Anything short of developing a "true" fix, leaves the business community with greater uncertainty than it had prior to S.B. 265.

BAT Through Rule Making On Sources Greater Than 10 TPY

Things may even be more complicated for sources that emit more than 10 tpy.  S.B. 265 mandates that Ohio EPA specify BAT on these larger sources through rulemaking.  S.B. 265 provided a three year window to give Ohio EPA time to develop rules specifying BAT for different air pollution source categories. 

In the three years since, Ohio EPA has yet to finalize a single rule defining BAT.  Since the three year deadline has passed, State law now prohibits Ohio EPA from requiring BAT on sources larger than 10 tpy because it has not adopted rules consistent with S.B. 265.  This State law requirement is in conflict with the federal law which requires approval from U.S. EPA before it can be deemed effective. 

On December 10, 2009, Ohio EPA proposed a policy titled "BAT requirement for Permit Applications Filed on or After August 3, 2009."  [August 3rd was the deadline imposed by S.B. 265 after which Ohio EPA could only require BAT through rulemaking].  The Policy was put out for public comment which closed January 31, 2010.  The policy describes the current status as follows:

Ohio is currently working to develop short-term and long-term set of rules that would implement S.B. 265.  A short-term rule would define BAT on a case-by-case basis consistent with the S.B. 265 provisions.  Long-term rules would attempt to define BAT by category when possible.  However, neither short-term nor long-term rules have been developed. 

U.S. EPA has told Ohio EPA that issuing permits on or after August 3, 2009 without BAT would be considered by U.S. EPA as "backsliding" under the statutory provisions of the Clean Air Act and would not be acceptable. 

The policy goes on to say, because Ohio EPA has not adopted any BAT rules it will require BAT on a case-by-case basis to avoid "backsliding" claims. 

First of all...It's been three years since passage of S.B. 265 and the business community is no closer to its goal of avoiding case-by-case BAT decisions.  Even what Ohio EPA describes as its "short-term rule" would require case-by-case BAT. 

Worse yet, the policy makes clear that businesses may even be worse off then prior to S.B. 265.  In the "Common Questions and Answers" Section of the Policy, at least two critical Ohio EPA comments appear:

Question 1:  If a company indicates they do not want Ohio EPA to establish a BAT limit because a BAT rule has not been developed, what should the permit writers do?

The Policy goes on to answer- try and get the company to voluntarily accept a BAT limit or Ohio EPA will have to process the permit without a BAT limit.  However, if there is no BAT limit in the permit, Ohio EPA states:

We will inform them [the business] that U.S. EPA would likely not approve the permit and that U.S. EPA may take some sort of action against either the company or the Ohio EPA because they don't approve the approach.  We will also inform them that we are obligated to provide U.S. EPA with a copy of any issued permit that does not contain BAT.

In essence, unless a business voluntarily accepts a case-by-case BAT limit, they will be subject to enforcement by U.S. EPA. 

The Second major issue appears in Question 5 of the Ohio EPA policy.  It relates to when sources can avoid New Source Review (NSR) which is the complex federal air permitting program.  Due to the complexities of the program there are strong incentives for businesses to avoid NSR.

Prior to August 3, 2009, Ohio EPA used BAT limits to avoid triggering NSR.  However, the policy makes clear they can no longer utilize BAT to avoid NSR because of the stalemate with U.S. EPA. 

The implication is more sources will have to go through a longer permitting process in order to avoid NSR.  Therefore, no only will sources end up with the same controls as prior to S.B. 265, it will take longer to get their permit.

Conclusion

The status quo should be unacceptable to the business community.  It must decide:

  1. Whether the reforms in S.B. 265 are worth holding onto. If not, new state legislation is needed to undo the mess.  
  2. If the reforms are still critical, then the business community must engage Ohio EPA to fix its issues with U.S. EPA.  It is very important that the business community involve itself in the details of developing a fix.  Otherwise, it risks Ohio EPA spending valuable time developing proposals businesses believe are unworkable.

Federal Judge Strikes Down Three Year Old Air Pollution Reform

On February 3rd Magistrate Judge Mark Able of the U.S. District Court in Columbus ruled that Ohio EPA (and really the Ohio General Assembly) violated that federal Clean Air Act by exempting small air pollution sources from stringent air pollution requirements.  At issue was one major overhaul of Ohio's air regulation included in state legislation (Senate Bill 265)  back in 2006.  The law was designed to reduce the regulatory burden on small businesses. 

The provision exempted small air pollution sources, those that emit less than 10 tons per year, from the requirement to install Best Available Control Technology (BAT).  These sources would still be required to install air pollution control equipment.  However, these small sources could avoid the more time consuming BAT permitting process.

I was Director of Ohio EPA when Senate Bill 265 was passed.  The complaint regarding BAT was that it resulted in uncertain regulatory requirements for business.  Upon receipt of an air permit for a small air pollution source, Ohio EPA would have to decide on a individual case-by-case basis which pollution controls were the most stringent for that particular source. 

Businesses complained that the determinations as to what constituted BAT were inconsistent among Ohio EPA's five district offices.  They also complained that businesses would not be able to plan ahead of time for the types of controls to install.  Rather, business would be forced to wait until Ohio EPA concluded its evaluation.

To reduce the regulatory burden, Ohio businesses sought two major reforms regarding BAT in Senate Bill 265.  The General Assembly passed the bill which included the following.

  1. Exempt all sources smaller than 10 tons from having to install BAT.
  2. After August 2009, Ohio EPA could only require BAT on larger sources (greater than 10 tons) through specific rulemaking for those types of sources.

The goal of reducing the regulatory burden was understandable.  However, there is a long standing tenant in the federal Clean Air Act that restricts the ability of State's to change pollution control strategies to achieve federal clean air standards.  This is referred to as "anti-backsliding."

  • "Anti-Backsliding"- If you drop an air pollution requirement, you must make up for those lost reductions through alternative control strategies. 

The best example of this perhaps is E-check, the automobile tail pipe test that used to be required in Cleveland, Dayton and Cincinnati.  E-check was dropped in Dayton and Cincinnati after the 10 year contract expired.  In order to drop the program, Ohio EPA was forced to make up the lost reductions through new air pollution control requirements.  One new requirement used to replace E-check was the requirement to use less polluting gasoline (RVP gas) in the summer months in Dayton and Cincinnati. 

Ohio EPA failed to adopt replacement strategies after the General Assembly dropped BAT on sources less than 10 tons.  It is my understanding, that Ohio EPA never actually even quantified the lost reductions attributable to dropping the BAT requirement.  U.S. EPA put Ohio EPA on notice this past summer that it failed to address the "anti-backsliding" issue.

Ohio EPA's failure to adopt new controls to replace BAT- a violation of the "anti-backsliding" principal- was one of the reasons Magistrate Abel struck down the provision as a violation of the Federal Clean Air Act.  According to a recent newspaper article, Ohio EPA has decided to stop issuing permits for small sources while it figures out how to address the decision. 

The agency said Wednesday it won't authorize any new or expanded emissions from small sources until the ramifications of the decision are understood. Spokeswoman Heidi Griesmer said the agency has temporarily suspended issuing permits.

"These are small sources of pollution," she said. "We will be complying with the judge's orders but we're right now looking through the decision and figuring out how to do that..."

Griesmer said it was impossible to determine immediately on Wednesday how many exemptions the state has granted to small source polluters. The agency estimates it will take two weeks to mine through its permit database and count them all, she said.

 

What a mess...

  • The Agency will be forced to decide what to do with hundreds of permits it issued in the last three years in which BAT was not required.  Does Ohio EPA go back and revoke those permits requiring businesses to install different air pollution controls? 
  • Does the Agency still try and comply with Legislative mandate to eliminate BAT for small sources?  If so, what new air pollution control requirements will it adopt to replace BAT for sources less than 10 tons.  
  • What about permits already in the system that were about to be issued?  No doubt the Agency will be forced to go back and determine BAT delaying these permits by many months.  

This is just a sample of the issues facing EPA after S.B. 265.  Next up-  The second major reform in S.B. 265 that prevents Ohio EPA from requiring BAT on sources larger than 10 tons per year unless done through rulemaking.   

 

Court Orders Full Hearings in Ohio Environmental Appeals

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.

Ohio Environmental Appeals Proceed with 1-hour Hearings Despite Court Actions

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."

A Dozen Companies File Constitutional Challenge to 1-hour Hearings on Ohio Environmental Appeals

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.

Environmental Commission Responds Forcefully to Appeal Deadlines Established by the Ohio Legislature

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.

Ohio BAT- Changes to State Air Pollution Control Strategy Prove Daunting

Back in 2006, while I was still at Ohio EPA, a major piece of state legislation worked its way through the General Assembly.  Senate Bill 265 was developed by business groups in Ohio to address concerns with the structure and implementation of Ohio air pollution permitting programs.  The main target to be fixed was the requirement for all non-federally regulated air sources to install Best Available technology (BAT).

Business groups believed that the BAT requirement put Ohio at a disadvantage to neighboring states by requiring a higher (and more costly) level of controls.  Even more importantly, Ohio businesses felt that implementation of BAT at Ohio EPA lacked the certainty that businesses look for in regulatory programs.

Issues with BAT

The lack of certainty stemmed from the fact that BAT was determined on a case-by-case basis with each individual permit that was submitted to the Agency.  Concerns were expressed that permit reviewers reached different conclusions as to what constituted BAT, sometimes for similar sources. 

During the debate over BAT I was at the center of the storm working as Director of Ohio EPA.  I had to testify numerous times before the Legislature.  While I did not agree with every argument against BAT, I did agree that Ohio EPA was placing too much time and energy into regulating small sources of air pollution.

  • FACT:  Ohio has some 70,000 regulated air sources in the State whereas Michigan has less than 10,000

The huge difference in regulated sources is not attributable to there being less industry in Michigan, rather it was because Ohio regulated much smaller sources.  For these reasons, Ohio EPA took a neutral position on the legislation.

Senate Bill 265 passed the Legislature and included two major components as an overhaul of the BAT requirement:

  1. It exempted all sources less than 10 tons per year from having to install BAT. 
  2. For sources larger than 10 tpy, Ohio EPA could only require BAT by adopting rules specifying what exactly BAT would be for particular sources.  The legislation gave Ohio EPA a three year window to adopt rules.  The window is up this month (August 3, 2009)

Region 5 U.S. EPA Questions Ohio's Ability to Modify BAT

In the ensuing three years since passage of S.B. 265 the course of change has been anything but certain.  U.S. EPA has issued two letters to Ohio EPA.  A June 2008 letter rejected Ohio EPA's rule which would exempt sources smaller than 10 TPY because U.S. EPA said Ohio EPA failed to prove Ohio's air pollution control strategy would not be weakened.  On May 22, 2009, U.S. EPA sent a second letter expressing concern over the impending deadline of August 3, 2009 when Ohio would no longer be able to require BAT without source specific rules.

In discussing the letters with staff, Ohio EPA is confident it can work out with U.S. EPA the exemption of sources smaller than 10 TPY.  However, it is much more difficult to envision a resolution of the issue pertaining to sources larger than 10 TPY. 

As an indication of the messy situation that may emerge, U.S. EPA Region 5 could start issuing notices of violation (NOVs) to all sources that receive an air permit without BAT after August 3, 2009.  In an attempt to avoid such a situation, Ohio EPA has discussed passing a rule that would require BAT on all sources larger than 10 tpy.  The rule would specify BAT are those general characteristics set forth in S.B. 265. 

  1. Work practices;
  2. Source design characteristics or design efficiency of applicable air contaminant control devices;
  3. Raw material specifications or throughput limitations averaged over a twelve-month rolling period;
  4. Monthly allowable emissions averaged over a twelve-month rolling period.

 

 

Sierra Club Sues Ohio for Failing to Enforce the Clean Air Act

It was not just Region 5 of U.S. EPA that was attacking changes to BAT. The Sierra Club filed suit against Ohio EPA over its rule exempting sources smaller than 10 tpy.  The Sierra Club challenged Ohio EPA under the Clean Air Act''s citizen suit provisions. 

In a very surprising decision, Magistrate Judge Abel found the citizen's suit provisions of the Clean Air Act did not allow suits against a State for failing to to enforce the Clean Air Act.  This decision will be appealed given its broader implications on the scope of the citizen suit provisions.  Given the prior precedents it is unclear whether Judge Abel's decision will be upheld.

Lessons Learned

We will have to wait and see how these major issues unfold over the next few months.  However, there is no doubt that the situation that has emerged after three years is not at all what was envisions during passage of S.B. 265.

The complexities involved in trying to change a State's air pollution control strategy on any significant scale are immense.  Ohio's BAT experience is a prime example.  With 70,000 regulated sources the ability to determine the impact of the BAT changes is almost impossible.  Making such a demonstration is the first step toward gaining U.S. EPA's approval.

Unfortunately, after three years businesses may be left with less certainty than they had before the overhaul was attempted. 

  • Back to case-by-case BAT
  • Region 5 scrutiny of Ohio EPA air permits
  • Continuing litigation of changes to Ohio's State Implementation Plan (SIP)

 

This is hardly the specificity that the business community envisioned during passage of S.B. 265.  Business groups envisions rules that would specifically state that type of controls or work practices that must be utilized for different types of sources.  The stop gap rule proposed by Ohio EPA looks more like case specific BAT.

Ohio Budget Update: Environmental Related Developments

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.

Ohio Budget Includes Directive to Speed Up Decisions on Environmental Appeals

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)

Budget Update: Ohio EPA Faces Potential Loss of 200 Staff

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)

What U.S. EPA's Formal Recognition of Cleveland's Improved Air Quality Means for Businesses

Yesterday, U.S. EPA announced a proposed rulemaking to formally recognize Cleveland and nearby counties as achieving the 1997 8-hour ozone standard (.085ppb).  As discussed in a previous post, this is very good news for Northeast Ohio businesses in any of the following counties: Ashtabula, Cuyahoga, Geauga, Lake, Lorain, Medina, Portage, and Summit.  U.S. EPA is taking comments on the proposed action until July 13th.

Three years ago the best experts thought it was impossible for Northeast Ohio to achieve the ozone standard by the 2010 deadline.  As a result, draconian measures were suggested by U.S. EPA, including "bumping up" to the next higher non-attainment classification "serious."  Such an action would have made economic growth in the area much more difficult.  It would also have increased environmental compliance costs for area businesses. 

The chart to the left shows the various federal pollution reduction programs that are mandated based upon non-attainment classification.  The chart shows the higher the classification of non-attainment the more federal mandates that will apply.

Northeast Ohio has been at a distinct disadvantage relative to other areas of the state due to its ozone non-attainment status.  It is the only "moderate" non-attainment are in the State.  This results in increased compliance costs for area businesses and also placed restrictions on economic growth not applicable to the rest of the State.  These disadvantages would have been magnified if the Cleveland-Akron-Lorain area was forced to have "bumped up" to serious non-attainment.

Once U.S. EPA finalizes the redesignation to attainment, these disadvantage disappear.  Cleveland-Akron-Lorain will be able to compete equally for new business growth opportunities.  All of this should be really good news for business and the citizens in Northeast Ohio.

The Plain Dealer failed to capture this fact in its coverage of the U.S. EPA ozone announcement.  Instead it focused on the temporary nature of the Cleveland-Akron-Lorain attainment status.  U.S. EPA has adopted a stricter ozone standard (.075ppb) which will likely be applied in 2010.  Current air monitoring shows Northeast Ohio around .084 ppb for ozone which means the same eight counties will once again be deemed "non-attainment" for ozone.   

While it is true the attainment status is temporary, concentrating only on this aspect of the story misses the broader picture.  If the area failed to achieve the 1997 ozone standard it would have faced more regulation and impediments to growth.  Now it appears unlikely that Cleveland-Akron-Lorain will receive a higher non-attainment classification than other major metropolitan areas in the State.  This means it will be able to compete equally with Columbus and Cincinnati for new jobs in the future even if it is once again considered "non-attainment."

The temporary attainment status may present a short window of opportunity for area businesses.  If a business was looking to expand its facility or construct a new facility that would be considered  a "major source" of air pollution, it may be able to obtain requisite permits easier than previously.  But businesses will have to be quick to take advantage if such a window presents itself.  U.S. EPA is set to make formal designation under the new .075 ppb ozone standard in 2010.  At most this means businesses could have a year to act.

Ending 40 Years Of Cleveland Jokes: A River's Recovery

June 22nd will mark the 40 year anniversary of the famous 1969 fire on the Cuyahoga River.  A picture of the fire in Time magazine was credited with bringing national focus to water pollution in the United States.  Here is a quote from a recent Cleveland Plain Dealer Article on the notorious fire:

"The fire did contribute a huge amount to the new environmental movement and it put the issue in front of everyone else, too," said Jonathan Adler, environmental historian and law professor at Case Western Reserve University. "Water pollution became a tangible, vivid thing -- like it had never been on a national level. "There was a sense of crisis at that point. It was: Oh, my God -- rivers are catching on fire.' "

In 1972, Congress passed the Clean Water Act whose stated goal is to make waterways across the country "fishable and swimmable."  Forty years ago, achieving the goal of the Clean Water Act seemed impossible for rivers like the Cuyahoga. 

The River was virtually dead from the release of industrial wastes and untreated sewage along with intensive urban and industrial development.  I remember talking with some of the original employees of the Ohio EPA who described the rivers like the Cuyahgoa and the Mahoning were virtually boiling from steel mills and other industrial sources that did not cool their water prior to discharging into the River.      

Flash forward to 2009, we are about to celebrate the anniversary of the fire by marking a significant achievement  in its recovery.  The Cuyahoga River Remedial Action Plan along with Ohio EPA has submitted a request U.S. EPA to take official action by removing most of the river  from list of the most polluted rivers in the Great Lakes (delisting request).  As the Chairman of the Cuyahoga RAP, I was lucky enough to sign the letter submitting the official request to U.S. EPA. 

The area of recovery stretches from Akron to 50 miles down the River to its navigation channel.  A once dead River is now teaming with life.  The River so notorious for its fire is now become a favorite for steelhead fly fishing. 

Perhaps no aspect of the recovery tells the story better then the return of fish to the River. The chart to the left is part of the delisting request to U.S. EPA.  It is a compilation of years of data collection from the River.  The horizontal axis is the miles of the River.  The vertical axis is the number of fish species. 

1969 is represented by the nearly flat purple line across the bottom indicatng virtually no life in the River except for its upper most reaches.  The green line across the top is 2008 which shows between 15 to 25 species living in the River.  (The dip in the green line is the Route 83 dam which shows how dams can have dramatic impacts on water quality)

What an amazing recovery.  From dead in 1969 to a River that has a wide variety of species and healthy fish in 2008.  Here are some more details on the return of fish to the River:

  • In 1984 the relative number of fish caught per kilometer was 53. In 2008 the relative number was 657 fish per kilometer. 
  • Total species in 1984 was 28, compared to 43 in 2008 with ¼ fewer sites. 
  • In 1984 there was only 1 individual of a sensitive species. In 2008 there were 10 sensitive species comprising 1412 individuals (31% of the total catch). 
  • In 1984 there were only 8 bass caught. In 2008 there were 221 bass caught, with the dominant species being Smallmouth Basin. 
  • In 1984 there was only 1 darter individual collected. In 2008 there were 5 species of darters (228 individuals). 
  • In 1984 there were no redhorse species (sensitive) in the entire reach. In 2008 there were 3 species (96 individuals). 

What are the reasons behind the miraculous recovery of the Crooked River?  It took a combination of major investment, successful environmental regulation and protecting the sensitive corridors along its banks. 

  1. Major investment by private industry and municipal wastewater treatment facilities- the North East Ohio Regional Sewer District and Akron's wastewater system have invested billions of dollar upgrading treatment.  Industry along the river has invested millions in new treatment wastewater treatment technology and improved business practices.
  2. Environmental regulation- Often maligned, the recovery demonstrates that regulation can be effective.  The Clean Water Act brought permits to all the major discharges to the River.  Overtime, as technology improved, the permits ratcheted down how much pollution dischargers could put into the river.
  3. The Cuyahoga Valley National Park and Cleveland Metroparks- Maintaining natural vegetation along the banks of rivers and streams has major benefits to water quality.  This vegetation operates as filters-absorbing non-point pollution before  it can impact waterways.  It also provide habitat for important bugs and critters that breathe life into streams.  The Cuyahoga Valley National Park protects 33,000 acres along the banks of the Cuyahoga River.  The park system operates as a massive riparian corridor along the River. 

Local news coverage of the remarkable comeback of the burning River has been good.  The Cleveland Plain Dealer has a series dedicated to the Year of the River.  But this deserves to be a national story.  So often the Midwest and Cleveland seem to be the epicenter of bad news- from a down economy to the housing crisis.  Don't get me started on the sports teams. 

What once brought Cleveland into the national spotlight for all the wrong reason should now bring attention for the rights ones.  How great would it be to see Time Magazine revisit the River forty years later!  Maybe with a picture of some fly fishing on the River.  Another reason to highlight the recovery nationally, the Obama Administration has requested $475 million in funding for the Great Lakes. What a better poster child for showing investment in the Great Lakes can work than the Cuyahoga.

If you want to do your part to help the river, you can purchase t-shirts and mugs embossed with the four fish graphic at the beginning of this post.   Money raised will be used to support on-going efforts to restore the River.  If you happen to be in the Cleveland area come down to the River on the 22nd and celebrate this amazing story or re-birth.  You can get details form of the events planned from the Cuyahoga RAP's website.

 

Ohio Announces Second Round of Diesel Grants

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)

Major Expansion of Areas Eligible for Ohio Brownfield Grant Program

These are great times to investigating potential brownfield projects in Ohio.  The State has two pots of money available under its Clean Ohio brownfield program.  1)  the Clean Ohio Revitalization Fund (CORF); and 2) the Clean Ohio Assistance Fund (COAF).  CORF is a competitive grant process where applications are pooled into rounds and the top projects in that round receive funding.  Under COAF, projects are evaluated on an individual basis and decisions are made by the Director of the Department of Development.

COAF- Areas Eligible to Apply for Funding is Greatly Expanded

 

 

 

 

 

 

 

 

 

 

This month, the Ohio Department of Development announced a major change to COAF-greatly expanding areas eligible to submit COAF applications.  Properties eligible to request  COAF funding are those located in a "inner city area", a "labor surplus area" or a "situational distress area" as defined by O.R.C. 122.65(H).  Each year the Ohio Department of Development releases a map of the State that identifies which areas fall under one of the three categories and could apply. 

On May 1, 2009, the Ohio Priority Investment Area Map was modified to reflect the recent changes made to the Federal Labor Surplus map. Under the old map 41 counties and certain cities were designated "priority investment areas" based on one of the three categories.  The new map designates 83 counties in Ohio as Labor Surplus Areas. This includes all of Cuyahoga County and most of the surrounding Counties. 

All areas designated on the Priority Investment Map are therefore eligible to file applications for the Clean Ohio Assistance Fund for assessment grants of up to $300,000 and cleanup grants of up to $750,000. COAF will have approximately $12 million for new grants in the coming year. Applications can be submitted on a rolling basis (no deadline). 

The Ohio Department of Development also modified the policies governing COAF.  One notable change is the prioritization of Phase II Environmental Assessment projects.  Here is what the Department said about this change:

In order to maximize assistance to distressed communities during the economic crisis and meet a critical need to prepare sites for cleanup and redevelopment, the Clean Ohio Assistance Fund will now reserve 75% for funding Phase II Environmental Assessments grants and 25% for funding cleanup grants.

CORF's - Redevelopment Ready Track

If you are looking at a project with much higher clean up costs than $750,000, then CORF is still a great option.  The State recently provided more flexibility to the program.  Last summer, the Ohio Department of Development made a major change to the CORF program by adding the "redevelopment ready track." Before this change an applicant for CORF had to identify in its application a committed end user post clean up. Under the "redevelopment ready track" an applicant could qualify for up to $2 million in grant funds to pay for clean up costs even without an end user.

A significant amount of cleanup funding is available in the upcoming rounds of CORF. Funding for Round 7 (deadline July 25th) and Round 8 will total $48 million in the coming year ($24 million per round), which is the largest amount the program has experienced in its history.

Unlike other States, Ohio has a lot of funding available for brownfield investigation and clean up.  Over the last year the State has increased the flexibility in the program and expanded areas within the State eligible for funding.  While the economy is down, it is a great time to explore development options for brownfield sites.  As the economy comes back the competitiveness of these programs will increase. 

 

Green New Deal? Green Trinkets and Empty Packages in the Stimulus Bill

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).

Tax Incentives
Three-Year Extension of Production Tax Credit (PTC): The bill provides a three-year extension of the Production Tax Credit (PTC) for electricity derived from wind facilities placed in service by December 31, 2012. The tax credit extends to other renewable energy sources such as geothermal, biomass, hydropower, landfill gas, waste-to-energy and marine facilities placed in service by December 31, 2013.

Investment Tax Credit (ITC) Accessible to All Renewable Energy: The bill provides project
developers of wind, geothermal, biomass and other technologies eligible for the PTC, the option
of instead utilizing the 30% ITC that previously only applied to solar and other clean technology
projects.

Repeals Subsidized Energy Financing Limitation on ITC: The bill would allow businesses
and individuals to qualify for the full amount of the ITC, even if their property is financed with
industrial development bonds or other subsidized energy financing.

Grant Program in Lieu of Tax Credits: The bill allows project developers to apply for a grant
from the Treasury Department in lieu of the ITC. The grant will be equal to 30% of the cost of
eligible projects that start construction in 2009 or 2010. It will be issued within sixty days of the
facility being placed in service or, if later, within sixty days of receiving a grant application.

Increases Credit for Alternative Fuel Pumps: The bill increases the size of credits for
installing alternative fuel pumps at gas stations from 30 to 50% ($30,000 to $50,000) for taxable
years 2009-2010.

Advanced Energy Manufacturing Credits: The bill provides $2 billion worth of energyrelated
manufacturing investment credits at a 30% rate.vi These credits apply to projects creating
or retooling manufacturing facilities to make components used to generate renewable energy,
storage systems for use in electric or hybrid-electric cars, power grid components supporting
addition of renewable sources, and equipment for carbon capture and storage (CCS).

Plug-in Electric Drive Vehicle Credit: The bill increases the tax credit for qualified plug-in
electric drive vehicles for the first 200,000 placed in service. The base amount of the credit is
$2500. Batteries with at least 5 kilowatt hours of capacity have a credit of $2917. The credit is
further increased by $417 for every kilowatt hour in excess of 5 kilowatt hours, but cannot
exceed $5000.viii The credit is allowed to be taken against the alternative minimum tax (AMT).ix
Five Year Carry-Back Provision for Operating Losses of Small Businesses: The bill would
extend the carry-back period for net operating losses (NOL) from two to five years for tax years
2008 and 2009. An eligible NOL includes the NOL for any taxable year ending in 2008 or if the
taxpayer chooses, any taxable year beginning in 2008. An election under this provision may only
be taken for one taxable year.

Extends Bonus Depreciation: The bill extends, through 2009, the temporary increase of bonus
depreciation to 50% that Congress enacted last year. These write offs can be applied to capital
expenditures ranging from $250,000 to a newly increased threshold of $800,000.
 

Direct Spending
Total Direct Spending for Renewable Energy and Energy Efficiency: The bill provides $16.8
billion in direct spending for renewable energy and energy efficiency programs over the next ten
years.

Grid Development: The bill provides $11 billion to modernize the nation's electricity grid with
smart grid technology.xiii This includes $4.5 billion for the DOE Office of Electricity Delivery
and Energy Reliability for activities to modernize the nation's electrical grid, integrate demand response equipment and implement smart grid technologies.xiv In addition, $6.5 billion is
provided for two federal power marketing administrations to assist with financing the
construction, acquisition, and replacement of their transmission systems.xv The bill also
increases federal matching grants for the Smart Grid Investment Program from 20% to 50%.

R&D, Demonstration Projects: The bill provides $2.5 billion for renewable energy and energy
efficiency R&D, demonstration and deployment activities.

Advanced Battery Grants: The bill provides $2 billion for grants for the manufacturing of
advanced batteries and components. This includes the manufacturing of advanced lithium ion
batteries, hybrid electrical systems, component manufacturers, and soft-ware designers.xviii
Defense Energy and Efficiency Programs: The bill provides $300 million to the DOD for the
purpose of research, testing and evaluation of projects to energy generation, transmission and
efficiency.xix The bill provides an additional $100 million for Navy and Marine Corps facilities
to fund energy efficiency and alternative energy projects.

Study of Electric Transmission Congestion: The bill requires the Secretary of Energy to
include a study of the transmission issues facing renewable energy in the pending study of
electric transmission congestion that is due to be issued in August 2009.xxi
Bond and Loan Programs

Clean Energy Renewable Bonds (CREBs): The bill provides $1.6 billion of new clean energy
renewable bonds to finance wind, closed-loop biomass, open-loop biomass, geothermal, small
irrigation, hydropower, landfill gas, marine renewable, and trash combustion facilities.xxii Onethird
of the authorized funding will be available for qualifying projects of state/local/tribal
governments, one-third for public power providers and one-third for electric cooperatives.

Renewable Energy Loan Guarantee Program: The bill provides $6 billion for a temporary
loan guarantee program for renewable energy power generation and transmission projectsxxiv
that begin construction by September 30, 2011.xxv Up to $500 million of the overall $6 billion
can be used for the development of leading edge biofuels that have been demonstrated and have
commercial promise to substantially reduce greenhouse gas emissions.xxvi

Improving Air Quality Good News to Cleveland Area Businesses

There is good news for area businesses.  Additional compliance costs and restrictions on economic growth will be avoided that were deemed all but certain a few years ago.  The compliance costs were associated with new air pollution controls needed to achieve  U.S. EPA's 1997 8-hour ozone standard (0.85 ppm). The deadline to meet this standard is 2009.

When I was Director of Ohio EPA,  all the modeling and projections showed there was no way Cleveland would meet the standard by the deadline. I remember giving speeches around the State with the basic theme- "we would have to de-populate Cleveland to meet the Ozone deadline."   I remember briefing the Governor that it appeared likely the Cleveland-Akron-Lorain Nonattainment Area would have to "bump up" to the next category of nonattainment-"serious."  By bumping up Cleveland would buy time to reach the standard, but the cost was a list on new federally mandated controls and restrictions.  Bump up would have had devastating impacts on the local economy.

[This is a slide taken from one of the speeches on reaching the ozone standard.  The numbers show various ozone levels at each monitor in the nonattainment area after imposing various control options.  The black number was a series of draconian measures that would have devastated the local economy.  Even after imposing those controls the models predicted continued nonattainment.]

 

 

Perhaps this is a lesson about not putting too much faith in modeling, but  based upon recent air quality monitoring Cleveland has indeed attained the 1997 8-hour ozone standard.   Area businesses may never be fully aware of the crisis that was averted.  But this is certainly good news for an area that has struggled to meet federal air quality standards.

Below is additional background on the recent Ohio EPA submittals.

In 2008, Ohio EPA submitted an State Implementation Plan (SIP) for the Cleveland-Akron-Lorain nonattainment area that requested redesignation to attainment status.  This was based on monitoring data from 2005,2006 and 2007 that showed Cleveland close to attainment [0.0853 compared to 0.0853]. 

This month, February 2009 Ohio EPA has prepared an updated attainment demonstration for the Cleveland that incorporates the most recent air monitoring data from the summer of 2008.  Due to ever improving air quality, the updated monitoring data shows Cleveland complies with the Standard [0.084 compared to 0.085 standard]. 

Here is additional detail regarding the two submissions:

2008 Ohio EPA Redesignation Request to U.S. EPA
In the February 2008, Ohio EPA submitted its request to U.S. EPA to have the Cleveland-Akron-Lorain nonattainment area redesignated to attainment. The document included two key conclusions:

1) Monitoring data for 2005-2007 showed the area just above the standard. The data showed 0.853 ppm compared to the 0.85 ppm standard.

2) Ohio EPA was requesting redesignation of the Cleveland-Akron-Lorain area based upon modeling that showed it expected the area to attain the standard by 2009. This was known as the "weight of evidence" approach (WOE). Under the WOE policy, U.S. EPA can redesignate an area attainment even though monitoring data shows it has not met the standard.  However, Ohio EPA must provide the federal EPA convincing evidence the area will reach the standard by the 2009 deadline.

Ohio EPA included the following language in the January 2008 submittal to U.S. EPA:

"The (air) modeling results as well as the previously submitted weight of evidence information supports the conclusion that Cleveland-Akron-Lorain OH area should attain the eight-hour ozone standard on time.

In spite of this evidence, Ohio EPA is developing additional emission reduction options. Ohio EPA recognizes that the ozone standard is currently under review and a final revision to the standard will most likely result in a revised standard that will require additional emission reductions above those necessary to achieve the existing standards. Ohio EPA is currently in discussions with U.S. EPA and local stakeholders assessing the options available to meet the future standard, including the use of lower Reid-Vapor Pressure gasoline. "

Bottom line: Ohio EPA left open the possibility it would impose additional control measures to support its WOE demonstration to U.S. EPA.

2009 Revised Ohio EPA Redesignation Request to U.S. EPA: Ozone levels improved significantly in the summer of 2008. The average of the 2006, 2007 and 2008 ozone seasons shows an overall average of 0.84 ppm which is below the 0.85 ppm standard.

This is very good news for the Cleveland-Akron-Lorain area. This means Ohio EPA no longer has to propose a WOE approach to U.S. EPA. Rather, Ohio EPA can rely on the real monitoring data which already shows attainment with the standard. As a result, all of the language I quoted above regarding evaluating additional control options has been dropped. In the 2009 submittal Ohio EPA states:

"The Cleveland-Akron-Lorain ozone nonattainment area has attained the 1997 NAAQS for ozone and complied with the applicable provisions of the 1990 Amendments to the Clean Air Act regarding redesignations of ozone nonattainment areas...Based on this presentation, the Cleveland-Akron-Lorain ozone nonattainment area meets the requirements for redesignation under the CAA and U.S. EPA guidance....Furthermore, because the area is subject to significant transport of pollutants, significant regional NOx reductions will ensure continued compliance (maintenance) with the standard with an increasing margin of safety."

Bottom line: It appears Ohio EPA is no longer evaluating additional controls to comply with the 1997 ozone standard. In addition, the language referring to "subject to significant transport of pollutants" is a reference to the fact our ozone levels are heavily influenced by emissions from elsewhere in Ohio and the Midwest. This means continued strengthening of programs like CAIR (power plant reductions) will continue to result in improved air quality.

Of course the story does not end here... U.S. EPA is in the process of imposing the new 2008 ozone standard (0.75 ppm). Current monitoring shows Cleveland is a long way from achieving the new standard. Unfortunately, this means Cleveland-Akron-Lorain will not get out from under its nonattainment status anytime in the near future.  But at least we are no longer discussing draconian measures to meet the old ozone standard.

Ohio EPA and ODNR Propose Major Fee Increases in Upcoming State Budget

During Governor Strickland's State of the State he made the "no new taxes" pledge.  However, the Governor did mention that to balance the budget he will propose "new fees, fines and penalties."  No specifics were provided, however, now that details are beginning to take shape the Governor Strickland has been criticized for his roll out of the nearly 120 fee increases.

While there are more significant fee increases on vehicle registration and other health care related services, this being an environmental blog, I will focus on the new ODNR and Ohio EPA fee increases.  As discussed below, it is going to be more costly for businesses (and residents) to get rid of their waste.  This should create even a greater incentive for businesses to look at their practices and see if there are ways to reduce the amount of waste that has to be disposed of in solid waste landfills.   This could be through process changes that reduce the amount of waste generated or it could be recycling/re-use of waste materials generated.

However, the ability to recycle or re-use solid waste generated as part of business operations is dependent upon Ohio EPA's beneficial re-use rules.  Unfortunately, those rules have not come forward which makes it more difficult for businesses to evaluate their options.  While the fee increases may push evaluation of "greener" alternatives to disposal, businesses face uncertainty as long as clear re-use standards are not established.

Here is a link to a spreadsheet put together by the Ohio Office of Budget Management which shows all the fee increases and the projected revenue (which reaches over $1 billion dollars). Here is a breakdown of the proposed fee increases as it relates to the environment:

Municipal Solid Waste (MSW)
While I was at Ohio EPA, the agency moved from general revenue (GRF) to fees to pay for its programs.  The municipal solid waste tipping fee was chosen because it was a broad based fee that touches residents and businesses.  Due to its broad based application, the Agency could use the funding to support various programs outside of the Division of Solid and Infectious Waste.  Sort of like a tax...right.

The proposed state budget will build upon past fee increases and further increase the MSW tipping fee by $1.25 a ton. This will bring the MSW tipping fee from $3.50 a ton to $4.75 a ton. Of the proposed $1.25 increase,  Twenty-five cents would go to ODNR for the Soil and Water Conservation Districts. The remaining $1.00 will go to Ohio EPA to support various programs.

Construction and Demolition Debris (CDD)
The proposed budget will increase the CDD tipping fee by $2.70 a ton. This will bring the CDD tipping fee from $1.70 a ton to $4.40 a ton. This amounts to an 60% increase in the fees for CDD.  The $2.70 increase would be divided as follows:  $2.25 will go to ODNR for the Soil and Water Conservation Districts and .45 will got to Ohio EPA for operation costs throughout the agency.

Green building practices under the U.S. Green Building Council's LEED program award points for recycling and reuse of construction waste.  With this significant fee increase contractors and project owners should seriously contemplate recycling this material versus disposal even if they are not working on a green building project.

New E-Check Fee
Ohio EPA has proposed an increasing the fee for purchasing new tires by $2.30 per tire.  This fee is projected to generated $15 million in new revenue.  The previous tire fee was used to pay for programs to eliminate tire dumps around the State.  This has been one of the greatest success stories in Ohio.  This increase would be devoted to an entirely new purpose-paying for Ohio's automobile emission testing program (E-check).

Energy Extraction Fees

ODNR for its part has proposed a new fee on oil, coal and natural gas extraction.  Together these fees are projected to generate over $7 million in new revenue.  The energy extraction fees have not been warmly received by industry who argue that raising costs on these energy related resources will simply result in increased costs for individuals and businesses around the state.  

As fees go up for use of resources and disposal of waste, businesses have further incentive to examine green alternatives.  This could be improved energy efficiency. establishment of a co-gen facility that could reduce electric fees, recycling, and reduction of waste streams.

(Photo:D'Arcy Norman/everystockphoto.com)

U.S. EPA Ozone Rule Shows Potential For More Flexibility in the Future

On January 12, 2009, U.S. EPA proposed a major revision to its rules implementing the 1997 8-hour ozone standard.

In yesterday's post, I discussed the possibility of E-check expanding in Ohio as a result of U.S. EPA's proposed revisions to implementation of the 1997 8-hour ozone standard (.08 ppm).  Today I want to discuss the larger ramifications of the proposed rule.  The proposal provides a crystal ball type glimpse into how U.S. EPA may implement the 2008 8-hour ozone standard (.075 ppm). 

Depending upon how EPA builds off this proposed rulemaking when developing an implementation rule for the new .075 ppm ozone standard, there could be good news for many areas in the Country, including areas in Ohio.  This is especially true for Cleveland which has been under the most stringent ozone requirements in the State. 

As discussed in yesterday's post, the rigidness of U.S. EPA's requirements is largely dependent upon how areas are classified under the Clean Air Act. The short version- Subpart I good...Subpart II bad.  The chart below captures how EPA requirements ratchet up the more severe your ozone problem.  With each higher classification Subpart II piles on more federal mandates.  Subpart I areas don't carry these same mandates.  In addition, there is no classification system-all areas area considered "basic" non-attainment areas.

In recognition that Subpart II carries with it far more regulatory baggage, in 2004 U.S. EPA tried to expand the scope of Subpart I. In order to expand the scope of Subpart I, U.S. EPA drew a line in the sand at a 1-hour design values of .121 ppm.  Areas below .121 ppm were placed in Subpart I. Using this dividing line, there were 126 areas in country designated "non-attainment" for ozone, 84 were under Subpart I and 42 were under Subpart II.  Cleveland was the only Subpart II area in Ohio.

However, legal challenges resulted in the Court throwing out EPA's dividing line of .121 ppm.  The D.C. Circuit Court said that the Supreme Court required .09 ppm on the 8-hour scale as the level for determining which areas would be subject to Subpart II.  In its latest proposal, EPA acknowledges it has discretion to place areas with an 8-hour design value of less than .09 ppm into Subpart I. EPA is proposing to forgo this option and place all areas under a Subpart II classification because it does not want to delay implementation of the 8-hour ozone standard any further. 

I would predict they will not forgo this option when it comes to implementation of the 2008 8-hour ozone standard of .075 ppm.  I believe they will put all areas with design values less than .09 ppm into Subpart I in order to provide maximum flexibility to the States designing their control plans to meet the standard (referred to as SIPs- State Implementation Plans). 

What is the ozone status in Ohio right now?  Based upon 2005-2008 Air Quality Data here are the current ozone design values for the highest ozone areas in the state.

CINCINNATI- .085 ppm

COLUMBUS- .08 ppm

CLEVELAND- .084 ppm

Based on current air quality Ohio should have no areas close to the .09 ppm cut off for placing areas into Subpart II of the Clean Air Act.  This would include Cleveland which is currently under Subpart II. This is good news for the States.  This approach would give Ohio EPA and other States the maximum flexibility in putting together their SIPs to attain the .075 ppm ozone standard.

E-Check May Come Back to Cincinnati Under EPA Proposed Rule

[NOTE: THIS POST WAS REVISED BASED UPON ADDITIONAL REVIEW AND INFORMATION]  The unpopular automobile tail pipe test known as E-check may resurface in Cincinnati under a U.S. EPA proposed rule.  Right now, Cleveland is the only area in Ohio with E-check because the area is under a federal mandate to operate the test.  That federal mandate could expand under a recent U.S. EPA proposal.

E-Check has operated in Ohio since 1995.  It operated for 10 years in Cleveland, Cincinnati and Dayton.  The program was always very unpopular with the general public.  Efforts to discontinue the program were instituted in the Ohio General Assembly on numerous occasions.  Finally, improving air quality and expiration of the 10 year contract allowed both Cincinnati and Dayton to get rid of E-Check back in 2006.  In November 2008 U.S. EPA issued final approval of the removal of E-Check as a control measure for both Cincinnati and Dayton

Now E-check may see a resurgence.

U.S. EPA has proposed modifications to the implementation rule for the 1997 8-hour ozone standard.  The implementation rule was issued back in 2004.  The rule was challenged by a group of environmentalists.  In 2006, in response to the challenge, a federal court vacated certain portions of the rule.  U.S. EPA has now issued a revision to the implementation rule in response to the Court decision.

One of the main components of the rule vacated by the Court was the manner in which U.S. EPA classified certain areas under the 1997 8-hour ozone standard.  Some areas with lower ozone levels were classified as Subpart I areas and higher ozone areas were placed under Subpart 2 of the Clean Air Act.  The distinction between Subpart 1 and 2 areas greatly affects the amount of flexibility these areas have in designing the air pollution control plans to comply with the 8 hour ozone standard. 

U.S. EPA attempted to place as many areas under Subpart 1 to provide the greatest degree of flexibility.  Of the 126 areas designated nonattainment, 84 were classified as under Subpart 1, and the remaining 42 as under Subpart 2.  Areas under Supart 2 are further broken down by severity of ozone.  The higher the ozone the higher the classification,  The higher the non-attainment classification the more federally mandated control programs and restrictions will apply to the area. (see next post for a chart on Subpart 2)

Under the old rule, Cleveland fell under Subpart 2 and was classified as a "moderate" non-attainment areas.  "Moderate" non-attainment areas are federally mandated to operate a basic vehicle inspection and maintenance program (I/M program).  Dayton, Cincinnati, Columbus and other areas of the state were classified under Subpart I which carried no federal mandate to run an I/M program like E-check.

Under the proposed rule, all areas designated non-attainment with the 1997 8-hour ozone standard will be classified under and subject to the requirements of Subpart 2 of the Clean Air Act.  If an area has already reached attainment with the 1997 8-hour standard the rule will not apply.  This means Dayton will not be covered under the rule as it has already achieved compliance.  However, areas like Columbus and Cincinnati which have yet to comply with the 1997 8-hour ozone standard risk being reclassified as Subpart 2 non-attainment areas.

Under the proposed rule, EPA would make retroactive classifications based upon 2001-2003 air quality data, not the latest readings which show notable improvement in ozone levels.  If EPA maintains this aspect of this proposal, some areas of the Country will be playing a game of high stakes poker with regard to meeting the 1997 8-hour ozone standard.  EPA states:

Marginal nonattainment areas would have a maximum statutory attainment date of June 15, 2007 and moderate areas a maximum date of June 15, 2010.  Since the marginal area attainment date has passed, EPA proposes that any area that would be classified under the proposal as marginal, and that did not attain by June 15, 2007...would be reclassified immediately as moderate under the rule.

What EPA doesn't specifically address but flows from the statement above is that areas that do not meet the June 15, 2010 deadline as a moderate areas face being bumped up to the "serious" nonattainment classificaiton.  This would not only bring E-check, but a host of stringent federal requirements.

Appendix A to the proposed rule identifies the proposed Subpart 2 Classification for areas likely covered by the rule.  Under the proposal, both Columbus and Cincinnati will be classified as "moderate" non-attainment areas.  The "moderate" designation carries with it the federal mandate to operate an I/M program.

Columbus and Cincinnati could avoid I/M programs if they can fully attain the 1997 8-hour ozone standard before this rule would become effective.  How do things look? 

Columbus:  Ohio EPA has submitted a redesignation request for Columbus which is still under review by U.S. EPA.  Ohio EPA says that the current air quality data from 2005-2008 shows Columbus with a .08 ppm ozone design value.  This is well under the .084 ppm necessary to show compliance.  If recent ozone trends continue Columbus could be redesignated before U.S. EPA finalizes its proposal thereby avoiding any of the complications brought on by the proposed rule.  

Cincinnati:  Ohio EPA submitted a redesignation request for Cincinnati.  However, unlike Columbus, Ohio EPA relies on modeling and not real air quality data in its request for redesignation.  Real air quality data in the SIP submittal shows a design value of .086 ppm.  Even the updated air quality information for 2005-2008 shows Cincinnati with a .085 ppm design value.  While modeling may show  .084 ppm, real air quality data does support the modeling estimates.  The 2009 ozone season could really be make or break for Cincinnati.  If its a bad ozone season, Cincinnati may not only face the return of E-check but a "serious" non-attainment classification which would bring a host of consequences.

 

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
 

 

Bill Introduced to Extend Ohio Audit Privilege for Environmental Violations

Senator Tom Niehaus has introduced S.B. 372 bill to extend the effectiveness of Ohio's Environmental Audit Privilege law for another five years.  The law is set to expire on January 1, 2009.  It was a hard fought battle for businesses to get the Audit Privilege law on the books in the late 90's.  While the law was watered down to address U.S. EPA concerns, it remains a valuable tool for some businesses. The law is intended to reward those companies that proactively evaluate their compliance with environmental requirements. 

What is the Ohio Environmental Audit Privilege law?  It is provides immunity from civil penalties if a company voluntarily discloses environmental violations to the appropriate State Agency that were uncovered as a result of an environmental compliance audit.  Note: a civil penalty can still be assessed even after a valid disclosure if the company enjoyed a "economic benefit" as a result of the violation, meaning delayed compliance gave it a competitive advantage.

As a further incentive to utilize the law, the content of an environmental audit report is privileged and not admissible as evidence in a civil or administrative proceeding. (See R.C. §3745.71(C) for exceptions to the privilege provisions)  This provision is meant to reduce exposure to third party suits as a result of environmental violations.

How frequently do businesses use the Audit Privilege Law?  In my experience the law has been used infrequently by Ohio businesses.  During my time at the Ohio EPA, I oversaw the processing of Audit Privilege disclosures.  I would estimate that the Agency received, on average, around four or five disclosures per year during my tenure. 

Why isn't the Audit Privilege Law used more frequently?  I was always puzzled why more companies did not take advantage of the Audit Privilege law.  Some may believe it is better to correct the violation and wait and see if it is discovered by the Agency.  With so many entities to inspect, some companies think it is better to take this risk the violation is discovered than have their disclosure denied for a technical flaw and face an enforcement action.

Other companies may think the administrative costs of performing an audit are too high.  Or some may be under the mistaken belief that Ohio's five year statute of limitations on environmental enforcement actions provides a better shield from penalties.  Just keep in mind that the trigger for the statute of limitations in R.C. §3745.31 is when the Agency "actually knew or was informed" of the violation.  So the Agency must be aware of the violation for the clock to run.

What are some of the reasons a request for coverage is denied?  The disclosure must be voluntary, which means it must not be required by some environmental law.  During my time at Ohio EPA, by far the most frequent reason a company was denied coverage was the disclosure of the violation was required by some other environmental law.  Of those companies denied coverage for this reason, most were Title V permitted sources under the Clean Air Act.   Title V sources are required to disclose violations as part of their permit terms and conditions.  However, even in these cases, the Agency frequently reduced penalties to reward the early disclosure of violations.

Here are additional requirements to be deemed a voluntary disclosure (See R.C.§3745.72(B)):

  1. Prompt disclosure
  2. Reasonable effort to achieve compliance as quickly as practicable
  3. Cooperate with the State Agency who is charged with investigating the disclosure
  4. Disclosure not required by law, prior litigation, or a prior order
  5. The company disclosing has no knowledge or reason to know of an Agency had previously commenced an investigation or enforcement action regarding the violations

What is involved in filing a disclosure to the appropriate state agency?  Unlike environmental permitting or grant applications, the submission to Ohio EPA to receive coverage under the Audit Privilege law is actually pretty minimal. R.C. §3745.72(C) requires that all disclosures must be in writing, dated, and hand delivered or sent by certified mail to the Director.  The written disclosure must include the following information: 

  1. the name, address, and telephone number of the owner or operator of the business making the disclosure;
  2. the name, title, address, and telephone number of one or more persons associated with

    the owner or operator who may be contacted regarding the disclosure;

  3. a brief summary of the alleged violation of environmental laws, including, without

    limitation, the nature, date, and location of the alleged violation to the extent that the

    information is known by the owner or operator; and

  4. a statement that the information is part of an environmental audit report and is being

    disclosed under R.C. §3745.72 in order to obtain the immunity provided by that section.

Are there good reasons to use Ohio's Environmental Audit Privilege Law if it is renewed?  Yes.  During my tenure, I was not aware of any enforcement action that was pursued against a company that made a valid and voluntary disclosure.  Just make sure you are not required to report by some other environmental law. 

I think the law may be ideal for companies that recently purchased a new facility or company.  Performing an environmental audit after such an acquisition is an excellent way to ensure your house is order. 

Also, the audit is a good way to have a third party to evaluate your compliance status.  You can always choose to not file the disclosure if you think its not to your advantage for some reason.

Ohio Will Solicit Second Round of Diesel Grant (DERG) Applications

DERG Round Two Schedule:  Tentatively, Ohio will begin soliciting grant applications on December 15th for the second round of funding under the Diesel Emission Reduction Grant (DERG) program administered by the Ohio Department of Development (ODOD).  DERG will have approximately $11.2 million in available funding in the second round.  The grants pay for retrofits of emission controls, engine rebuilds, and a portion of the purchase price of new diesel vehicles.  Here are the tentative dates as discussed in a meeting with ODOD last week: 

  • Monday, Dec. 15: release of the RFP with a press event, media release and posting of application documents on the website.
  • Monday, Jan. 12 at 10 a.m.: first of two bidders conferences
  • Monday, Feb. 9 at 10 a.m., second bidders conference
  • Monday, March 2, applications due
  • The selection team will take up to 60 days to review, score and forward successful applications to the Federal Highway Administration. Projects selected for funding will be notified by May 1, 2009

Grants are available to both public and private entities.  Because the source of funding is the federal Congestion Mitigation Air Quality (CMAQ) program, private companies must enter into a contract (called a Public Private Partnership- PPP) with a public entity.  The money follows from the state to the the public entity who then reimburses the company. 

What Does DERG Pay For? Diesel grants are a great way to pay for fuel saving equipment, like auxiliary power units (APUs), that reduce idling.  Engine or vehicle replacements can be partially funded through the DERG program.  Also, companies who want a greener fleet for contract bidding or as part of the company's sustainability efforts can pay for retrofits that dramatically reduce emissions from their diesel engines.  All applications require a twenty percent (20%) match.

Issues With Round One of DERG:  As discussed in prior posts, the DERG program experienced significant problems and delays in the Round One of funding. Most notable, 42 applications were filed in round one, but only 10 applications were deemed complete- all of which received funding.  As a member of the Ohio Diesel Coalition, we have advocated for a series of improvements to the grant application process to ensure a transparent and competitive grant process.

Improvements to DERG Round Two:  Last week, representatives of the Ohio Diesel Coalition, including myself, met with members of an inter-agency team working on the DERG program to review changes to the program. The State's inter-agency team is composed of officials with the Ohio EPA, Ohio Department of Development and Ohio Department of Transportation.  To help improve the overall application process and to ensure complete applications are submitted, the inter-agency team will put in place the following changes for Round Two:
 

  1. A concisely written Request for Proposals (RFP) will be released by ODOD
  2. template of the Public Private Partnership agreement (a major stumbling block for many in round one) has been posted on the DERG website
  3. All successful round one applications have been posted on the website
  4. Applicants are given more time to prepare applications (up to 2 months)
  5. Two separate bidders conferences (in person, by telephone or over the web) will be offered in advance of the application due date to answer questions
  6. The State developed a consolidated application form to cover all types of projects (retrofits, repowers and replacements)
  7. A checklist will be included in the application packet to ensure applicants include all required information

Other Developments:  ODOD made a policy decision to set aside $5 million of the remaining $11.2 million in funding for public transit projects. However, if total transit requests are below $5 million, all other fleets can compete for these funds. There is no ceiling on project amounts, but the minimum amount that could be requested is $20,000 per project.
 

When To Look For The New Application:  The new RFP has not yet been posted on ODOD's web page.  I imagine all the documents, including the RFP, checklist and other documents will be posted on the release date of the RFP (December 15th).  Keep an eye on ODOD's website for this information.  In the meantime, it may be a good idea to evaluate projects and approach a public entity about a PPP contract

(Photo: Flickr terinea/everystockphoto.com)

CO2 Decision Impacts Ohio Coal Plant Permits

 

It didn't take long for the Deseret Power Decision to come back to Ohio.  The debate is over whether a permit for the proposed coal to liquid fuel plant proposed by Baard Energy and AMP Ohio's new coal power plant can move forward in light of the decision.  Here is a sampling of the debate over the Baard project as it appears in the local paper The Vindicator:

The statements came as the state EPA is on the brink of issuing an air permit for the proposed $5.5 billion Baard Energy plant that would turn coal into liquid fuel. Settles said a decision is expected to be made within the next two weeks.

The air permit would be the final permit needed to begin construction that would be a boost to the local economy. Permits regulating the plant’s effects on water and wetlands have already been approved.

In a statement, the Sierra Club said it went before the EPA Appeals Board in May of this year to request that the air permit for Deseret Power Electric Cooperative’s proposed waste coal-fired power plant in Utah be overturned because it failed to require any controls on carbon dioxide pollution.

The Sierra Club’s statement said the decision means that all new and proposed coal plants nationwide must go back and address their carbon dioxide emissions.
 

AMP Ohio's permit is facing an equal challenge.  In today'sDaily Sentinel, AMP Ohio was a bit cautious in its statements:

Carson (AMP Ohio) also pointed out, the decision was not in Ohio, which has a fully approved state permitting program, and that AMP-Ohio has worked for over a year in cooperation with Ohio EPA in meeting all requirements of Ohio law in regards to getting the plant online. Carson also pointed out the permit for the Utah plant was not denied but sent back to a regional office for reevaluation.

In a press release, the Sierra Club stated: “Two of the largest new coal proposals for Ohio, the AMP-Ohio power plant in Meigs County and the Baard liquid coal plant in Columbiana County, are likely to face setbacks from the ruling. Both companies had previously insisted that carbon dioxide should remain unregulated — an argument rejected in today’s ruling — and had resisted attempts to establish carbon limits in their air permits.”

Obviously there is a disagreement between the Sierra Club and Ohio EPA on how the decision will affect the permits at issue.  While Ohio EPA is correct that it is one federal court decision, the two cases that have had final decisions issued on whether C02 must be evaluated as part of federal New Source Review (NSR) have certainly been more in favor of requiring controls.  The Georgia State court held CO2 is a regulated pollutant and the pollution control analysis (BACT) for the new coal plant had to include controls for CO2.

The Sierra Club is a certainly overstating the decision in Deseret (see their Press Release) by claiming that all new coal plants must address CO2.  As discussed in my last post, the Environmental Appeals Board remanded the permit to U.S. EPA.  The Board said U.S. EPA has discretion to go either way- determine CO2 is a regulated pollutant or decide monitoring requirements are not enough to trigger requirements to control CO2. 

The Board did reject U.S.EPA's basis for saying historical precedent tied its hands from determining monitoring was enough to trigger regulation of CO2.  However, the Board did not say U.S. EPA couldn't develop a defensible position.

What is certain, is there is tremendous uncertainty.  From these comments we can anticipate Ohio EPA will issue the permit (known as "The Ohio River Clean Fuels LLC") without requiring analysis of CO2.  The Baard permit will be challenged and it is totally uncertain as to whether the permit will be invalidated by either a State or Federal Court in Ohio. The AMP Ohio Permit faces similar uncertainty.

Ohio EPA's Overhaul of Water Regulations

This fall Ohio EPA Division of Surface Water (DSW) has been releasing a series of intertwined rule packages that govern streams and discharges to waterways.  Some business groups have said that the packages represent the most significant overhaul of water regulations in thirty years.

  To date, 3 out of 4 packages have been released:

  1. Antidegredation Rule
  2. Water Quality Standards
  3. Section 401 Water Quality Certification Rule
  4. Stream Mitigation Rule (to be released in early 2009)

No doubt the packages are highly technical and cover a myriad of issues.  But what are the implications for businesses in Ohio?

 Boiling down the packages, here are the major changes:

  • Creation of a new State Water Quality Permit for impacts to streams
  • Complete overhaul of mitigation requirements for stream impacts
  • Comprehensive tightening of standards for discharges to water ways (will result in more stringent discharge permits for businesses)
  • Standards for drainage ditch maintenance
  • Phase out of open lake disposal for dredged sediment from ship channels by the Army Corps of Engineers
  • Introduction of a nutrient standard for newly constructed or modified wastewater treatment plants

STATE WATER QUALITY PERMIT

I already discussed the new State Water Quality Permit in a prior post.  I believe Ohio would be the first state in the Country to create a state permit for impacts to streams that are not covered by the Clean Water Act.  The State is reacting to a series of Supreme Court decisions which have reduced federal jurisdiction over waterways and wetlands.

WASTEWATER DISCHARGE STANDARDS

Ohio EPA is proposing to tighten standards for some 135 chemicals.  They are also proposing to revise the human health criteria applied to NPDES discharge permits.  The more stringent standards will be incorporated into NPDES permits after they are renewed (NPDES permits have a 5 year life cycle).  Depending on the business and the nature of their discharge, the tighter standards could result in significant upgrades to wastewater treatment plants. 

The biggest question from business groups regarding the strengthening of water quality standards is....Why  now?   Many of the revised standards were part of U.S. EPA updates from 2000. 

MITIGATION FOR STREAM IMPACTS

For wetland impacts, Ohio mitigation requirements are very straightforward and are set forth in rules.  The ratios for required mitigation and the quality of wetland mitigation is all tied to the class of wetland impacted (Ohio classifies wetlands as either Class I, II or III).

Stream mitigation requirements are not straightforward.  Ohio EPA's stream mitigation requirements have been described by developers as a "black box."   The fact is mitigation is decided on a case by case basis, and lack of consistency is a legitimate concern.  To address this longstanding issue, Ohio EPA is attempting to clearly defined mitigation requirements for streams. 

Each of the four packages contain some aspect that is relevant to stream mitigation requirements.  However, until Ohio EPA releases the main rule package on stream mitigation requirements it will be difficult to see how the pieces fit together.  However, certain aspects of the rules that have been release foreshadow what is coming:

  • Primary Headwater Habitat Designation- Ohio EPA creates this new designation and creates three classes based on the quality of the stream.  For lower classes, the focus of the designation is hydrology and not aquatic life.  This sets up mitigation requirements.  If you impact a Class I stream by moving or filling it, you will have to restore the hydrology lost as part of your mitigation.
  • "Upland Drainage" and "Water Conveyance" Designations- applies to drainage ditches (or what Ohio EPA refers to as "historically channelized watercourses").  The purpose of these new designations for ditches is to encourage better management practices, such as natural stream design when performing maintenance on ditches.  
  • "No Net Loss" Principle Applied to Streams-  A legal issue surrounds the amount of impacts that are allowed under antidegredation principles to streams versus wetlands.  For wetlands, there has been a "no net loss" that actually allows destroying an entire wetland if its value is replaced through mitigation.  There is an open legal question as to whether the same flexibility exists for streams.  Ohio EPA is proposing to settle that issue by bringing the "no let loss" principle to streams.

DRAINAGE DITCHES

A source of major controversy in Ohio has been poorly maintained drainage ditches (see the Ohio Environmental Council web page).  Through mother nature's influence over time, drainage ditches can become valuable headwater streams. The controversy occurs when a farmer or County engineer wants to dredge a ditch for drainage or flood control that has not been maintained for many years.  Will the rules even allow them to perform that work if the stream has become a valuable resources, such as a warmwater habitat stream?

NUTRIENT STANDARDS

For the first time in Ohio, the Agency is proposing to require treatment standards for nutrients.  Nutrients, such as phosphorus and nitrogen, are one of the most significant causes of water quality impacts in the State (U.S. EPA Nutrient Website for background).  The Agency is proposing to take a step in the direction of regulating this pollutants by requiring treatment for nutrients as part of Best Available Demonstrated Control Technology (BADCT) that will apply to new wastewater treatment plants or modifications to the biological treatment process of an existing plant.

Gore Calls For Protests to Stop New Coal Plants Over Global Warming

Al Gore, speaking at the annual meeting of the Clinton Global Initiative, called for young people to perform acts of civil disobedience to stop construction of new coal plants.  He also has called for State Attorney Generals to review whether utilities are committing stock fraud by discounting the threat of global warming. 

I put this post up after writing yesterday about the Arkansas proposal to pass legislation prohibiting construction of new coal plants.  Preventing construction of new coal plants that do not use carbon sequestration appears to be the number one strategy of green groups and those concerned with global warming. 

Ohio could soon be a major battle ground.  While the AMP Ohio facility has received its permit for construction of its new baseload coal power plant, it should be bracing itself for challenges on all fronts. During the public comment period on the new period concern was expressed that the facility would emit 7.3 million tons of CO2 per year.  Right now AMP Ohio appears to be the rare coal plant project that is still moving forward having received its authorization to construct from Ohio EPA.

Carbon Sequestration Regulation and Permitting Moves Forward

Carbon capture and sequestration (CCS) is a critical strategy proposed for combating climate change.  It involves the injection of CO2, a greenhouse gas, generated by coal-fired power plants and industrial facilities deep beneath the earth's surface for long term storage. 

There are potential significant issues with CCS, including:

  1. 1.  Pollutants from the plant mixing with the CO2 that is injected leading to contamination of water supplies;
  2. 2.  Potential mobility of CO2 once it is injected; and
  3. 3.  Corrositivity of CO2 may result in release of subsurface contaminants into drinking water supplies

The Department of Energy and Coal State's are betting heavily on the success of carbon sequestration.  Federal funds are supporting some 25 projects around the country that will investigate the feasibility of CCS. 

To address the concerns with CCS, U.S. EPA and the States are beginning to develop regulations for CCS projects.  This Summer major developments include release of U.S. EPA's rules and the issuance of an Underground Injection Control (UIC) permit by Ohio EPA for an Ohio test site.

Beginning this month, the Midwest Regional Carbon Sequestration Project (MRCSP) is utilizing FirstEnergy's R.E. Burger Plant as a test site for injection of up to 3,000 tons of CO2. As reported on the MRCSP web page, the period of injection could vary from three to eight weeks, depending on the properties of the injection zones and the time needed for experimental set-up, regulatory oversight and monitoring.

The injection follows Ohio EPA's issuance on September 2, 2008 of a permit to allow the installation and pilot testing of the underground injection well for purposes of carbon sequestration.  This is the first permit issued in Ohio that would allow injection of CO2 subsurface for purposes of carbon sequestration.  Some interesting aspects of the permit include:

  1. Injection will occur at three different geologic locations-  the intervals range from 5,923 feet to 8,274 feet below surface.  The intervals are selected to prevent mobility of the injected CO2.
  2. Closure financial responsibility-  Total project closeout including closure of the well in accordance with regulatory requirements were estimated at $75,000 to $100,000.  This amount only covers sealing of the well.  No money is set aside in the event any other issues arise. Some may question whether this is sufficient financial assurance if it was anything other than a test site.
  3. Monitoring of Injected Fluids-  On a quarterly basis, the injected material will be analyzed for various contaminants including SO2, NOx, particulate matter, and mercury.  The monitoring is an attempt to verify contaminants from the plant are not mixed with the injected CO2.

Issuance of the permit precedes finalization of U.S. EPA proposed rules governing regulation of carbon sequestration projects.   U.S. EPA's proposed rules and Ohio EPA's permit rely on similar legal authority on the Safe Drinking Water Act (SWDA).  The permit together with the proposed rules give insight into how CCS projects could be regulated in the future. Areas covered by both the permit and U.S. EPA's proposed rule include:

  • Geologic site characterization to ensure that wells are appropriately sited
  • Requirements to construct wells in a manner that prevents fluid movement into unintended zones;
  • Periodic re-evaluation of the area around the injection well to verify that the CO2 is moving as predicted within the subsurface;
  • Testing of the mechanical integrity of the injection well, ground water monitoring, and tracking of the location of the injected CO2 to ensure protection of underground sources of drinking water;
  • Extended post-injection monitoring and site care to track the location of the injected CO2 and monitor subsurface pressures; and
  • Financial responsibility requirements to assure that funds will be available for well plugging, site care, closure, and emergency and remedial response.

While the regulations and permitting of CCS are moving forward, not everyone is embracing CCS. In recent testimony before the U.S. House of Representatives Energy and Commerce Subcommittee on Environment and Hazardous Materials, serious concerns were raised by the American Water Works Association (AWWA) about the potential effect CCS technology may have on the nation's underground sources of drinking water.  Strong regulations and successful pilot tests will go a long way to addressing these concerns.

 

U.S. EPA Requests Ohio Provide Support for Air Reforms

Ohio EPA recently received a letter from U.S. EPA's Region V requesting justification for changes made to the State's air pollution control plan.  The changes to the State plan came about as a result of reform legislation passed by the Ohio Legislature in 2006.  Much has recently been made about the letter sent by U.S. EPA.  There has been two articles (article 1 and article 2) by Spencer Hunt in the Columbus Dispatch discussing the letter.  Also, there was recently an Editorial in the Toledo Blade chastising the Agency for being easy on "polluters" and for failing to timely submit the required information to U.S. EPA. 

Environmental groups have strongly criticized the portion of the legislation that allows smaller facilities (less than 10 tons per year) to avoid installing best available technology (BAT) and install reasonably available control technology (RACT) in its place.  This change has been described as weakening the protection of Ohio's environment.  In reality, it at worst will men minimal increases of pollution from these small sources.  As discussed below, increases that are more than offset by other programs.

I am familiar with these arguments having been at the center of the storm during the legislative debates over S.B. 265.  The editorial and comments strongly criticizing these changes seem to ignore some fundamental facts about Ohio's regulation of air pollution. 

The criticism ignores the fact that federal air quality standards are getting more stringent, not weakening.  Most notably, U.S. EPA recently strengthened the ozone standard.  Ohio still must meet the federal air quality standards.  The state legislation (S.B. 265) provided more flexibility in choosing how to comply.  Bottom line, Ohio's air quality has improved and will continue to improve.

So what was the purpose of the legislation?  Did you know Ohio regulates over 70,000 air sources while its neighbor, Michigan, only regulates 7,000?  This is not because we have so many more sources in Ohio, its because we decided long ago to regulate much smaller sources of air pollution in the state. With Ohio's struggling economy, it makes sense to be more efficient and effective in how Ohio met federal air quality standards.

Maybe this puts the 10 tpy threshold in perspective-the brand new permit for the AMP Ohio Coal fired power plant allows it to emit 3,194 tpy of NOx and 6,820 tons of SO2.  That is one source.  The equivalent of at least 300 or 600 smaller sources taking advantage of the 10 tpy exemption.  (Remember sources less than 10 tpy still must have controls, they just don't have to install more costly controls).

Even when the AMP Ohio facility comes on line, total emissions from Ohio's power plants will be drastically reduced. The total emission budget for Ohio power plants under the federal CAIR program in Ohio is 180,677 tpy of NOx which will be reduced to 95,556 tpy of NOx in 2015.  The reduction of some 85,000 tons of NOx will more than offset any insignificant increase attributable to small sources installing less costly controls.  And that is just one major reduction on-the-books, more reductions will also be forthcoming.