In perhaps the biggest environmental decision in decades, the D.C. Circuit Court of Appeals upheld all aspects of EPA’s complex regulation of greenhouse gases under the Clean Air Act.  Each piece of EPA regulation was controversial, yet the Court validated the overall approach paving the way for future action by EPA. 

Flashback several years ago, when the Obama Administration stated its preference was to enact cap-and-trade legislation to address climate change.  The Administration it preferred Congressional action rather than using the authority under the Clean Air Act which it saw as ill-suited for regulation of GHGs.  In an attempt to encourage a reluctant Congress to act on the controversial legislation, EPA threatened that it would proceed with enacting regulations under its existing Clean Air Act authority.   

Congressional efforts to pass cap-and-trade failed, while EPA continued to march forward with regulations.  Like a series of dominoes, once the initial regulations were promulgated successive regulation followed capturing more sources.  Here is a brief re-cap of EPA’s actions:

  • Endangerment Finding- before regulating greenhouse gases (GHGs) from motor vehicles, the Supreme Court told EPA in Massachusetts v. EPA that the Agency must first determine whether GHG emissions "endanger public health;"
  • Tailpipe Rule–  After making the determination GHG motor vehicle emissions did endanger public health, EPA enacted standards for emissions from motor vehicles under the Tailpipe rule;
  • "Regulated Pollutant"-  Under the CAA’s structure, once a pollutant becomes "regulated" from any source, stationary sources must comply with New Source Review (NSR) requirements.  The CAA establishes a permitting threshold of 100/250 tons per year for any "regulated pollutant."  EPA issued the "timing rule" to clarify that GHGs from factories and other so called "stationary sources" would be covered by NSR once the Tailpipe standards were effective.
  • Tailoring Rule–  EPA determined that automatic application of the 100/250 ton threshold for stationary sources would overwhelm regulatory agencies,  The Agency estimated federal permit applications would jump from 280 per year to 81,000 per year. To soften the blow of inclusion of GHG emissions in NSR permitting, EPA enacted the Tailoring Rule.  Through the rule, EPA temporarily raised the permitting trigger thresholds from the CAA 100/250 tons up to 75,000 tons per year.

Industry and some States filed challenges to each of the rules discussed above.  The Court consolidated those challenges and on June 26th, the D.C. Circuit issued its opinion in Coalition for Responsible Regulation, Inc. v. EPA, No. 09-1322 (D.C. Cir. June 26, 2012).   The Court rejected all of the Coalition’s challenges to each of the EPA rules. 

While an appeal to the Supreme Court is likely, the D.C. Circuit often cited to the Supreme Court’s decision in Massachusetts v. EPA to support upholding the EPA rules.  Therefore, it is quite possible the Supreme Court will reject a petition to hear an appeal.

Notable Findings of the D.C. Circuit

The importance of Court’s decision cannot be overstated.  The most fundamental finding was the Court upheld every aspect of EPA’s overall regulatory strategy for GHGs.  Here are some other key findings of the Court:

  1. Science v. Policy–  The Court said that EPA’s was directed by the CAA to make its Endangerment finding based purely on science, not policy.  Petitioners wanted EPA to consider other factors, such as: implications on the economy; whether GHG regulation would be effective in mitigating climate change; and whether society would simply adapt to climate change. The Court held EPA was limited to making a determination as to whether GHGs from motor vehicles endanger public health and welfare based  purely upon science.  The Court noted that EPA relied upon reviews of some 18,000 peer reviewed scientific studies in concluding GHG emissions do endanger public health.
  2. Precautionary Principle-  The Petitioners challenged EPA’s Endangerment Finding because it did not specifically determine the level of atmospheric concentration of GHGs that endanger public health (i.e. the safe levels of GHGs).  The Court found the CAA is "precautionary and preventive" in nature.  In other words, EPA need not establish with certainty that climate change is occurring and will cause specific harms.  EPA only needed to find that the scientific evidence show its reasonable to anticipate dangers to public health if GHGs are not controlled.
  3. Those Who Benefit from Reduced Regulation Don’t Have Standing to Challenge the Reduction–  Of all the EPA climate change rule-making, the Tailoring Rule seemed to be the most susceptible to legal challenge.  EPA, in essence, re-wrote a statue through rule-making.  This is typically not a power granted the executive over the legislative branch of government.  Perhaps to avoid confronting the issue, the Court held the petitioners had no standing to challenge the relaxation of the 100/250 ton per year permitting threshold in the Tailoring Rule because petitioners only benefit from the rule.  The Court questioned why Petitioners would want the rule struck down triggering thousands of federal permits.
  4. Court Says Congressional Action Unlikely-  In commentary, the Court said it hat "serious doubts" that Congress will ever enact legislation addressing Climate Change. 

What’s Next?

If the decision stands, it paves the way for EPA to proceed with stricter regulation using its existing CAA authority. EPA could proceed without any Congressional action.

Even though EPA’s Tailoring Rule was upheld, the Agency will be forced to slowly ratchet down over time the permitting threshold.  Unless Congress acts, EPA will be forced to require permits from more and more sources, including smaller commercial buildings.

EPA is also likely to follow with additional GHG regulations.  EPA will likely adopt new GHG emission threshold standards for major source categories.  It is even possible that EPA will implement National Ambient Air Quality Standards (NAAQS) for regulation of GHGs.  Use of the NAAQS could force each of the states to adopt there own GHG regulations on sources.

While EPA marches forward with complex GHG regulations, as things stand, it appears the Court is right in its prediction that Congress will not take action.    Any sort of  cap and trade bill appears dead. With the division between Republicans and Democrats over the issue, it appears Congressional reform of the CAA to better fit GHG regulation is highly unlikely.

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.

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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.

With regard to industrial properties and brownfields clean ups, perhaps no issue clean up standard has garnered more attention and increased scrutiny than indoor air.  It looks like 2012 could be the year when EPA finally updates its decade old draft guidance. 

EPA never finalized its 2002 draft guidance on assessing indoor air risks ("OSWER Draft Guidance for Evaluating the Vapor Intrusion to Indoor Air Pathway from Groundwater and Soils"). The lack of official guidance has left a regulatory void regarding clean up standards.  In 2009, the Inspector General sharply criticized EPA for failing to develop final guidance (IG Report).   EPA responded to the IG report by promising to finalize new vapor intrusion guidance by the fall of 2012.

What is vapor intrusion?

Chemicals in soil and groundwater can volatilize into the air and come up through basements and slabs into buildings.  For well over a decade, EPA has required clean up plans to include an assessment and evaluation of the risks posed by vapor intrusion into buildings.

The typical process for evaluating risk had been to plug soil and groundwater sampling data into a model ("Johnson & Ettinger Model") to predict indoor concentrations within existing and future structures at a site. If concentrations were too high in an existing building, EPA would require either additional clean up or a mitigation system (similar to a radon mitigation system) to reduce concentrations.  If concentrations were too high in soil and groundwater even where no current building existed, EPA could force deed restrictions to prevent future construction in those areas of the site.

Virtually all industrial and brownfield properties have the potential to present vapor intrusion risks including current and former manufacturing and chemical processing plants, warehouses, landfills, dry cleaners, and gas stations.

Why is new guidance on vapor intrusion such a big deal? 

When EPA guidance is updated, it will likely lead to more conservative assumptions.  More than likely, EPA will require more data gathering beyond just simple modeling.  For example, EPA already has moved toward requiring more subslab sampling to evaluate concentrations of chemicals directly beneath buildings.

Updated guidance could possibly lead EPA to re-open sites that had previously had their clean ups blessed by state or federal regulators. for example, Superfund (CERCLA) requires EPA to review site clean ups every five years.  Would updated guidance require re-evaluation of these sites?

New guidance could also lead to more toxic tort litigation if plaintiffs claim prior investigations were not adequate or assumptions become more conservative.  Or, it could impact development plans or financing. 

EPA Release First New Guidance

In February 2012, U.S. EPA’s Superfund division released a new document titled Superfund Vapor Intrusion FAQs.  The new document isn’t the final guidance EPA promised in response to the IG report.  However, it does provide some insights into what the new guidance will look like once its released.

Using the answers to questions in the new FAQ, one can gain insights into the direction EPA likely to head with new final guidance on evaluating vapor intrusion, including the following:

  • Evidence from sites since 2002 show that concentrations of pollutants in indoor air are difficult to predict by extrapolating from samples to modeling;
  • EPA recommends modeling only as a way to potentially screen out a site and will be more appropriate for evaluating future buildings on-site;
  • EPA will move to requiring more soil gas sampling and sub-slab sampling to determine vapor intrusion concentrations;
  • More conservative assumptions are going to be built into the model which will make it much more likely a site will fail screening values (for example, EPA will incorporate an assumption that it is about 10 times more likely vapors will move into buildings from deep soil-gas;
  • New screening values will be developed; and
  • At CERCLA and other regulatory sites, EPA is more likely to require community involvement in sites where vapor intrusion is being studied.

 

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 one 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.

The picture is still very murky with regard to what brownfield funding will look like in Ohio.   The program is being transferred from the Ohio Department of Development to JobsOhio.  The Kasich Administration has stated it believes the program needs to be overhauled.  (Click here for prior post regarding transfer to JobsOhio) 

Only sketchy details have emerged as to what brownfield funding may look like after the transfer.  Comments from JobsOhio officials have suggested the grant model will be tossed in favor of loans.  This has local officials from around the state voicing concerns regarding such a radical change to what has been viewed as a very successful program.

Articles have appeared in newspapers around the State discussing local official concerns over changes to the Clean Ohio program.  Below is a synopsis of recent articles.

Middletown

On Monday, the Middletown Journal had a lengthy story discussing the potential impact on the City’s efforts to address multiple brownfields.  The title of the article captures the concern among City officials "Middletown Clean Up Efforts May Reduce with State Change."  The concern expressed, which I have echoed in prior posts as wells, is that JobsOhio will be moving away from grants and more toward loans.

Middletown’s acting Economic Development Director Denise Hamet said there will be fewer applications in a year to clean up brownfields — which are defined as industrial properties that are either vacant or underutilized with environmental contamination to prevent reuse or redevelopment — if a loan policy is in place.

“I think you wouldn’t have a lot of projects penciled out if you have to repay remedial work because that’s above and beyond doing the normal work,” Hamet said. “It’s hard to get projects to pencil out beyond normal construction costs.”

Hamilton Economic Development Director Jody Gunderson agreed and said grants reduce risks.

“That’s why the grant system has worked so well,” he said. “You’re mitigating risk for property owners and the city when you bring in grant dollars.”

Cleveland

In an article from February 13th in Crain’s Cleveland Business, titled Leaders fear stalled brownfield clean up cash, local official expressed concern regarding the lack of assessment money as well as a shift to loans from grants.

Tracey Nichols, Cleveland’s director of economic development, fears the state under new rules will reject applications that can’t identify a specific new property owner with plans to clean up and redevelop a property. The city often has used Clean Ohio money to clean up properties without committed end users so that the properties would be ready for use when prospective buyers or developers come along.

“Most companies aren’t going to say, "I love that site and I’ll wait two or three years until you’re done cleaning it up,’” Ms. Nichols said.

Akron

On March 28th, the Akron Beacon Journal also had an article discussing the uncertainty around future brownfield funding.  I was interviewed for the story and discussed that the uncertainty means potential projects are in limbo until details emerge. 

The article was titled Future of Ohio Clean Up Program is Uncertain. The ABJ pointed out the tremendous benefit the City of Akron has received from the program. 

Over the years, the city of Akron got about $16 million in brownfield money from the Clean Ohio Fund. That includes grants for the Goodyear redevelopment, Bridgestone America headquarters, Canal Place, the Middlebury grocery store, the old Beech Street power plant and the Landmark Building.

The brownfield program has been in limbo for some time in Columbus with the change. The state earlier stopped accepting applications. The program is to be reactivated July 1.

Dayton

On March 5th, the Dayton Daily News ran a story titled "Fund Change May Hurt Ohio Development."  The lengthy article detailed the number of projects in the Dayton area that would not have moved forward without Clean Ohio brownfield funding.  Local officials and developers also expressed serious concern with moving from a grant to a loan based program.

Downs said the cost of evaluating and rehabilitating old industrial sites would be too high for the city and most developers if Clean Ohio were a loan program.

“A loan program is certainly less attractive to us than what exists right now,” he said. “We couldn’t take advantage of it like we have the existing program.”
 

Toledo

A series of letters to the Editor in the Toledo Blade have pointed out the strong benefit the Clean Ohio program has had in the Toledo area. 

  • Since its creation in 2000, public and not-for-profit conservation groups across the state have used the program to protect more than 26,000 acres of natural areas and 20,000 acres of farmland from development.- Steve Madewell is executive director of Metroparks of the Toledo Area. (click here for April 22nd letter)
  • Black Swamp Conservancy has been a regular participant in the farmland preservation program. Our land trust has helped farm families bring millions of dollars to our region’s economy. The conservancy has helped protect more than 7,000 acres of northwest Ohio farm ground — prime soil that always will be used for agriculture.-Kevin Joyce, Executive Director Black Swamp Conservancy Perrysburg (Click here for April 26th letter)

 

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.

 

On April 17th, EPA issued new rules designed to reduce air emissions from oil & gas operations, including wells drilling using hydraulic fracturing ("fracking").  The new federal standards (New Source Performance Standards -NSPS) are seen as the first significant new federal regulation governing fracking. 

Some may wonder how gas wells generate air emissions.  When a horizontal gas well is drilled and fracking is used, large amounts of water and some chemicals are pumped down the well to break up rock in the shale formations in order to release the gas for recovery.  Prior to putting the well into production, the water and chemicals are removed.  This is referred to as "flowback water."

When flow back water is recovered it is accompanied by gases, including volatile organic compounds (VOCs) and methane, which in most cases, is simply vented to the atmosphere. 

Methane emissions from fracking has received significant attention recently due to the fact it is a potent greenhouse gas- 20 times more damaging than CO2 emissions.

EPA says that the oil & gas industry is the largest source of methane emissions in the U.S. making up approximately 40% of all methane emissions.  Controlling VOC and methane emissions is what prompted EPA to issue the new federal standards.

EPA Delay’s More Expensive Controls to 2015

EPA seeks to reduce air emissions from fracking by requiring, initially destruction of the gas and then recovery through "green completion."  In a green completion, special equipment separates gas and liquid hydrocarbons from the flowback that comes from the well as it is being prepared for production. The gas and hydrocarbons can then be treated and used or sold.

EPA’s draft rule would have mandated "green completion" as the best control technology.  However, industry voiced strong concern that the equipment wasn’t widely available and requiring this technology too quickly could impact production.  In the final rule, EPA decided to delay the mandate for "green completion" until January 1, 2015.

Until 2015, producers must control emissions by using flares to burn off the VOCs and methane emissions. The flare must be able to eliminate 95% for the VOC emissions.

For more information:

 

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.