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

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

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

Bring Logic to Air Quality Standards and Regulations 

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

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

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

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

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

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

Moonshot on Brownfield Redevelopment

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

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

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

U.S. EPA Proposes 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.