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:
- All sources less than 10 tons per year (tpy) were no longer required to install BAT
- 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?
- Ohio EPA would have to quantify the lost reductions from "weakening" the BAT requirement (something Ohio EPA hasn’t done in three years).
- 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:
- Whether the reforms in S.B. 265 are worth holding onto. If not, new state legislation is needed to undo the mess.
- 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.