There was an excellent article in the New York Times discussing the issues homeowners and landowners are facing when signing oil & gas leases- Learning Too Late of the Perils in Oil & Gas Leases. 

The Times reviewed 111,000 oil & gas leases from Ohio, Pennsylvania, New York Texas and West Virginia.  It found many of the leases contained very unfavorable terms for landowners and homeowners who sign up with drilling companies.  Many of the issues pertain to the potential environmental problems that may happen once drilling commences or even after work is finished at the property.

Concerns identified included:

  • less than half the leases compensate for water contamination;
  • many lack language to protect against livestock and crop damage;
  • grant driller broad rights to build road, store chemicals and even leave waste in place once drilling has ceased.

Not discussed in the article are other issues that need to be considered by landowners when negotiating leases. 

First, even if the lease contains language which entitles the landowner to compensation if environmental contamination or other property damage occurs, does the company really have the resources to pay?  Its possible the corporate structure is established to prevent liability from flowing to the parent corporation.  

Second, what happens if you neighbors sue you claiming environmental contamination, nuisance or property damage?  Does the lease provide any guarantee that your attorney costs will be paid? 

Landowners are constantly hearing about the opportunities associated with the Marcellus and Utica shale deposits.  However, are they protecting themselves properly in the event something goes wrong?   

The Clean Ohio Council awarded half the available funds for brownfield redevelopment for fiscal year 2012 two weeks ago.  As discussed in prior posts, available funding is running out in the next few months.

The future of State brownfield funding became uncertain when the Kasich Administration shifted funding from the state’s liquor profits to JobsOhio.  I was interviewed for an article appearing in Gongwer last week discussing the future of the program.   It is clear from the article that the Administration is trying to replace the liquor profits with different funding to continue brownfield grants beyond fiscal year 2012. 

Ms. Sabatino said the administration has indicated the program will continue, although it has yet to identify an alternative source of funding. "I know they’re actively working on it as we speak," she said.

Kasich spokesman Rob Nichols added, "Helping put brownfields back to work to create jobs is valuable and something Ohio will continue to do. As we transition from state-run job growth efforts to efforts run by the private-sector experts at JobsOhio, we’re evaluating these programs to make sure we have the right
tools to serve job creators and to make sure taxpayers are getting a good return on their investment."…

The revitalization program provides reimbursements to communities working to clean up brownfield sites, and interest in the program has been high, DOD Community Services Division Chief William Murdock said. "There’s more demand than there is supply, and that’s a really good sign," he said.

Mr. Koncelik said, however, the few projects that were denied funding in this round could multiply should the future financial source be smaller than the previous one.
"A new revenue source may dramatically cut down the available funding, and won’t have as robust a program, not as many projects will happen," he said, adding it could be half a dozen or more projects that are rejected in future rounds.

I am glad to see the future of the program is starting to get coverage in various publications.  It is an important public policy issue that deserves such coverage.

(Gongwer article provided with permission of publisher)

Current Debate Regarding the Future of the Clean Ohio Program

The Kasich Administration has announced that it is re-evaluating the Clean Ohio program.  The next round of the Clean Ohio Revitalization Program (Round 12) will be the last.  Also, funding under the Clean Ohio Assistance Fund, which pays for sampling on brownfield properties, is likely to run out as soon as February 2012.

It appears the Administration is discussing other funding sources that may allow the program to continue.  (See Clean Ohio Funding End 2012….What Next?)  Last week, an article in Crain’s Cleveland discussed the potential end of the program:

Ohio Department of Development spokeswoman Katie Sabatino said the state considers these successful programs, but is evaluating its options for assisting with the redevelopment of brownfield sites. Of the Clean Ohio Fund in particular, she said, “The Ohio Department of Development is working with the (Kasich) administration to chart a path to assist with brownfield issues….."

“It was supposed to end June 2014, but word out of Columbus is it will end sooner,” said one observer who asked not to be identified because he’s shepherding brownfield projects still under review. “I’m very concerned about them pulling the rug out from under us.”

 In the article, it states that the Administration may be interested in moving towards loans instead of grants. 

In addition, Mark Kvamme, chief investment officer of JobsOhio, is said to prefer loans over grants, according to a half-dozen economic development professionals who work with the state’s programs. He was not available last week for comment.

A similar change is under way at the Third Frontier Commission, which runs loan and grant programs for technology companies. Crain’s reported in June that Mr. Kvamme was behind recommendations the commission is adopting to move to loans from grants.

Advocates of the change say loans not only stretch the reach of public funds, but also cause applicants to be more discerning about what they propose when they’re on the hook to pay the money back.

Loans versus Grants

The problem with loans is that the require the developer or company considering a brownfield to pay for the entire cost of investigation or clean up.  Total clean up costs can range from $500,000 to $5 million or more.  This is the cost just to clean up the land, not the overall development costs. 

If developers and companies are required to utilize their own funding to pay for all the clean up and investigation costs, most will look to greenfield sites instead of re-utilizing urban properties that have pre-existing contamination.  Heavy industrial properties will simply sit idle unless the value of their location is so great it outweighs the clean up costs.  This is an unlikely scenario for the vast majority of brownfield sites.

Ohio already has a brownfield loan program that almost no one is currently utilizing- Ohio Water Development Authority’s Brownfield Loan Program.  Under the OWDA program you can obtain a low interest loan for sampling (up to $500,000) or clean up ($5 million).  Despite the fact more sites are eligible for OWDA’s program than Clean Ohio, OWDA has had trouble attracting interest in the program.

Under the grant program, applicants still have "skin in the game."  Under the Clean Ohio program, applicants are required to provide a 25% match.  Paying 1/4 of the clean up costs makes many for brownfield sites attractive to development. 

Future of Clean Ohio

Funding had been available for Clean Ohio to continue until July 2013.  However, as discussed in the Crain’s Article funding has been shifted to other priorities. 

Word is the Kasich Administration is looking for a funding source to continue a brownfield redevelopment program.  The Administration may also be overhauling the program. Let’s hope that what ever emerges provides a real opportunity for our urban core to attract development.

Last Friday, I attended the Clean Ohio Council meeting with my client Miceli Dairy Products, Inc. (Miceli Dairy).  I had worked with Miceli Dairy over the last couple years on evaluating five parcels of property adjacent to their current facility on which the Dairy would like to expand its operations. 

The Dairy submitted an application to receive approximately $3 million in grant funds to assist with demolition, clean up and installation of infrastructure on the brownfield parcels.  The Dairy’s application was competing with fourteen (14) other brownfield redevelopment projects from around the State. 

The fourteen projects were in competition for the available funding.  Each project is scored using various factors such as how much contamination is being cleaned up, number of jobs, etc.  In the end, the Miceli application was the number one project in the State and the Council voted to fund the application.  (Click here for press release from the Clean Ohio Council)

Miceli Dairy’s expansion is a great story. Did you know that Miceli is the largest ricotta cheese manufacturer in the U.S.?  The Company has a wonderful Cleveland history that is best described in the Plain Dealer story profiling the Dairy’s expansion plans. 

However, without the Clean Ohio program the expansion may never happened in the City of Cleveland.

Why the Project Wouldn’t Have Worked without Clean Ohio

During the Clean Ohio Council meeting several comments were made the the Miceli project was one of the most complicated to every go through the program.  Here were some of the issues that complicated use of the brownfield parcels for expansion:

  • Two businesses operated on the parcels- a drum reclamation facility and plating operation;
  • Both businesses were the subject of environmental enforcement actions by the Ohio Attorney General’s Office;
  • No environmental sampling has been performed prior to the project so it was impossible to know the levels of contamination present;
  • Liens were on the properties that exceeded $1 million dollars;
  • Hazardous waste units and drums were located on the parcels that needed to be cleaned and that work is ineligible for Clean Ohio funding;
  • Buildings in poor condition were located on site that made it difficult to obtain samples; and
  • Large debris piles were across the site.

All of these issues had to be addressed for the project to move forward.  It is clear that without funding through Clean Ohio the costs of sampling and clean up alone would have prevented expansion onto these parcels.  Without funding it was quite possible Miceli may have been forced to look outside Cleveland to expand its operations.

(Map:  From Cleveland Plain Dealer Article cited above)

Ever since Rapanos,  EPA has struggled to consistently apply the "continuous surface connection" and "significant nexus test"  which both emerged from the Supreme Court decision. The two tests are to be used to determine whether wetlands fall within federal jurisdiction.  

To combat these inconsistencies, the Army Corps (ACOE)  has adopted guidance documents to help its staff apply the tests in the field.  The ACOE’s first Post-Rapanos guidance document was issued in 2008. The U.S. EPA and ACOE worked together to draft the second Post-Rapanos guidance document in June 2011.  EPA’s webpage still identifies the 2011 guidance as "draft."

Federal Courts Limit ACOE and EPA Use of Guidance

National Mining Association v. Lisa Jackson

While EPA and the ACOE continue to try and use guidance to clarify their regulations, the courts have severely limited application of guidance in wetland permit reviews.  In the latest decision, National Mining Association v. Lisa Jackson (Oct. 6, 2011), the U.S. District Court for the District of Columbia struck down policies and procedures adopted by U.S. EPA and the Army Corps of Engineers (Corps) regarding dredge and fill permits under the Clean Water Act.

The guidance involved "mountaintop removal mining," where rock and soil overburden is moved from atop coal seams and placed drainage channels.  In 2009 the EPA, Corps, and the U.S. Department of Interior entered into a memorandum which outlined when EPA would review Section 404 permits that involved surface coal mining and water quality impacts.

EPA argued that the memo clarified the procedural process for reviewing Section 404 permits.  EPA says it had broad discretion to establish procedures in how to implement statutes.

The Court disagreed.  It said that the memo had the legal impact of a rule because it imposed unequivocal requirements.  Also, the Court said the Clean Water Act limits EPA’s role to select functions in the Section 404 permit review process, such as issuing a veto of a permit if EPA determines it will have an "unacceptable adverse effect."  The Court said the memo tried to expand EPA permit review role beyond that enumerated in the CWA.  Therefore, the Court said the memo was actually a rule in disguise.

Precon Development Corp., Inc. v. ACOE

The National Mining decision follows the Fourth Circuit decision in Precon Development Corp., Inc. v. Army Corps of Engineers, in which the Court also limited use wetland guidance in permitting decisions.  In Precon, the Court refused to provide the same legal deference to the Corps permitting decision because it had failed to adopt a rule for applying the "significant nexus test." 

In Precon, the Corps had utilized its 2008 Post-Rapanos guidance document in arriving at its decision a wetland was subject to federal jurisdiction.  The Court found that ACOE administrative record supporting its determination was inadequate.  The Court said the ACOE must find some evidence that the wetlands and other water bodies at issue perform functions that are considered "significant" for there to be determined a connection to a navigable water. 

The Court suggested the ACOE jurisdictional review may have been entitled to more deference if the Agency had adopted a rule rather than using guidance in making its decision.  The Court said it would not give as much deference to the ACOE application of the "significant nexus test" in this case because the Agency relied the 2008 Post-Rapanos guidance and not a rule. 

Conclusion

The EPA and ACOE’s 2011 Post-Rapanos guidance has still not been finalized.  The public comment period was closed in July. 

Both the National Mining and Precon cases demonstrate that, even if the guidance is finalized, the Agency’s jurisdictional determinations will not receive as much deference without a formal rule.  Furthermore, if any aspect of the 2011 guidance is found to impose unequivocal requirements on Section 404 applicants it could be struck down as illegal rulemaking.

 

In early November, the EPA sent to OMB the next significant regulation governing greenhouse gas emissions.  Under the latest rule, EPA would establish CO2 emission standards for new and modified coal-fired power plants. 

The new rule is titled the Greenhouse Gas New Source Performance Standard (NSPS) for Electric Utility Steam Generating Units.  The NSPS standards are based on the best demonstrated technology (BDT) that has been demonstrated to work in a given industry, considering economic costs and other factors. The standard can vary from source to source. It could be a numerical emission limit, a design standard, an equipment standard, or a work practice standard.

The proposal will clearly be the next in an ongoing debate regarding EPA regulations and jobs. 

EPA States:

“EPA will work with OMB throughout the interagency review process and will issue the proposal when this review is complete,” said EPA spokeswoman Betsaida Alcantara. “EPA has engaged in an extensive and open public process to gather the latest and best information.”

In a story in the LA Times, the Heritage Foundation attacked the latest EPA proposal:

"We don’t believe that unelected bureaucrats should be doing what Congress was elected to do," said Nicolas Loris, policy analyst at the Heritage Foundation, which has battled the EPA regulation of carbon from the outset. “The economic costs of regulation by the EPA or by a cap-and-trade system far outweighs any environmental benefit we would get from these measures."

Asked how the Heritage Foundation would like to see this problem addressed, he added: "First we need to step back and look at what the real problem is: CO2 isn’t black smoke that is emitted from factories; it’s a colorless, odorless gas. Does it contribute to global warming and climate change? Sure. But it’s the role of Congress to figure out the best way to address those effects in a way that protects our economy."

Inability of Congress to Act Leave Void EPA Has Authority to Fill

In Congress, there appears to be no pragmatists anymore, especially when it comes to EPA regulatory authority.  The approach from either side tends to be all or nothing..

With Congress deadlocked the policy vacuum will be filled.  In this case, EPA has the authority under the Clean Air Act to regulate greenhouse gases (GHGs).  The Supreme Court in Massachusetts v. EPA already declared CO2 and the other GHGs a "pollutant" under the Clean Air Act that can be regulated.

In fact, EPA has been sued multiple times to exercise this authority.  As long as the Clean Air Act remains unchanged, the Court cases are generally going to support EPA’s authority.  While the Heritage Foundation is correct that CO2 is much different than the other "pollutants" regulated under the Clean Air Act, unless Congress acts to change the law to treat it differently EPA will and is legally obligated to implement new regulations. 

D.C. Circuit Panel Selected to Hear Challenges to EPA’s Existing GHG Rules

While EPA is poised to issue its NSPS to control CO2 from power plants, its earlier GHG regulations have been challenged.  There are two main GHGs rules being challenged:

  1. EPA’s "endangerment finding"– a prerequisite to regulating GHGs from motor vehicles.  In making the finding, EPA was required to review the latest science and determine whether GHGs endanger human health and the environment. 
  2. EPA’s "Tailoring Rule"– EPA recognizes that CO2 is emitted in orders of magnitude greater quantities compared to other Clean Air Act pollutants.  In an effort to make the existing structure of the Clean Air Act fit GHGs, EPA issued the tailoring rule which raised the trigger thresholds for certain federal permitting requirements (i.e. New Source Review) even though the triggers appear in the Clean Air Act itself.

The panel in the D.C. Circuit that will be hearing these challenges was recently announced.  An excellent article on Greenwire discusses the three judges on the D.C. Circuit panel.  The judges are Chief Judge David Sentelle, a conservative appointed by President Reagan, and two Clinton appointees: Judge Judith Rogers and Judge David Tatel. From the article:

All three had some involvement when the court tackled Massachusetts v. EPA, the case that — once it went up to the Supreme Court — ultimately gave EPA the authority to regulate carbon emissions.

Lawyers familiar with the litigation over the rules say the panel probably favors EPA based on each judge’s record in environmental cases and regulatory cases in general.

Overall, the panel "will examine the arguments fairly but rigorously," said Jonathan Adler, who heads the Center for Business Law and Regulation at Case Western Reserve University School of Law.

"This may appear to be a panel predisposed to support the EPA, but it is also a panel that is not likely to let the EPA get away with slipshod arguments," he added.

The "tailoring" rule, which interprets the Clean Air Act in such a way that only major polluters are required to obtain permits for greenhouse gas emissions, is the one that is viewed to be most vulnerable. Critics say it essentially rewrites the Clean Air Act.

Given the scientific foundation that supports the conclusions climate change is real and humans are contributing to the problem, it is unlikely that the Court will overturn EPA’s Endangerment Finding.  However, as discussed in the article and in prior posts, EPA "Tailoring Rule" is based on a house of cards.  A fundamental axiom of the law is you cannot rewrite a statute through rulemaking.

 

Back in June, the Supreme Court agreed to hear the case of Sackett v. EPA which could forever change the way EPA enforcement actions are defended.  While the case involves an EPA administrative enforcement order for unauthorized filling of a wetland, the ruling potentially impacts EPA enforcement under all its major statutes- RCRA (hazardous waste), Clean Air Act (CAA), Clean Water Act (CAA), and even CERCLA.

What is at issue?

When EPA believes a violation of its regulations has occurred it has the power to issue an administrative order compelling the alleged violator to remedy the issue.  EPA takes the position that the person/entity subject to that order cannot challenge the Order’s validity prior to EPA taking a formal enforcement action in Court (referred to as "pre-enforcement review"). 

EPA’s position leaves the person or company subject to the order with a Hobson’s choice- either comply and incur the costs upfront or defy the order and face penalties for its noncompliance.

The courts have almost universally upheld EPA’s position that its compliance orders cannot be challenged until it takes an enforcement action.  However, the Supreme Court has agreed to take a fresh look at this issue in the Sackett case.

Synopsis of Sackett Case

The Sacketts were building a residential home on their property.  EPA alleges that, during construction of the home, the Sacketts filled a 1/2 wetland without a permit. Filling a wetland without a permit is a violation of Section 404 of the Clean Water Act.   EPA issued an administrative order requiring the Sacketts to remove the fill and restore their property to its original condition.

Sacketts could either spend the money to remove the fill and restore the property or they faced penalties for non-compliance with EPA’s order of up to $37,500 per day.  To give an idea of the risk the Sacketts must take if they did not comply, one month’s worth of penalties could equal $750,000.

Sacketts petitioned EPA for a hearing to challenge EPA conclusion that their property had a jurisdictional wetland.  EPA did not grant the hearing, so the Sacketts filed suit making the following challenges:

  1. No Bar to Pre-Enforcement Review of EPA’s Order–  The Sacketts argue that the Clean Water Act ("CWA"), unlike CERCLA (Superfund), contains no express statutory bar to pre-enforcement review of administrative orders.  Therefore, the should be able to challenge the validity of EPA’s order without risking being subject to civil penalties for non-compliance with the Order.
  2. If there is a Bar to Pre-Enforcement Review it Violates Due Process under the Constitution–  In the alternative, if the Court finds that the CWA does contain an implied bar against pre-enforcement review, such a bar violates the U.S. Constitutional guarantee of Due Process.

 Game Changer?

If the Supreme Court agrees with the Sacketts, companies and individuals would be provided much better options when facing an EPA order.  Rather than immediately complying or risking penalties, they could challenge the EPA’s order in Court.  Importantly, the challenge could be made before EPA has the legal authority to assert civil penalties for failure to comply with the Order.

This case involves EPA’s enforcement authority under all its major statutes (CWA, RCRA, CAA and CERCLA).  This means EPA efforts to immediately compel action under any of these statutes through administrative orders would be practically be eliminated.  It would likely mean that EPA would, in many cases, skip the administrative order step and immediately sue in Court.

Legal Arguments

Implied Bar Against Pre-Enforcement Review

Only CERCLA contains an express bar in the statute against pre-enforcement review of administrative orders issued under the Act.  While the other environmental statutes (CWA, RCRA and CAA) don’t contain such an express bar, the Administrative Procedures Act (APA) states that a bar exists if the "the congressional intent to preclude judicial review is fairly discernible in the statutory scheme."

The Ninth Circuit in Sackett said the bar was implied in the CWA because Congress intended EPA to have the authority to remedy violations quickly.  Similar arguments have been successful in other cases challenging EPA’s authority involving other statutes.

The Supreme Court will review the Ninth Circuit’s determination that an implied bar exists.

Bar Against Pre-Enforcement Review Violates Due Process

Even if the Court finds the implied bar exists, it could still say such a bar violates the Constitution.  At issue will be whether the negative ramifications of receiving a Unilateral Administrative Order constitute property deprivations protected by the Due Process Clause

General Electric ("GE") challenged EPA’s Administrative Order authority when it received an CERCLA Order requiring clean up.  GE argued that its stock price could suffer, its brand would take a hit and it could face higher financing costs.  GE said all of these negative ramifications were enough a property deprivation to require due process (i.e. the ability to challenge the Order pre-enforcement).

The D.C. Circuit rejected GE’s arguments.  It said GE could always challenge any penalties for noncompliance once EPA brought an enforcement action in Court.  It also found the consequential impacts on GE from receiving the Order were not significant enough to merit due process protection.

Conclusion

The odd thing is that the Supreme Court agreed to hear the Sackett case.  Only three weeks earlier it rejected GE’s petition on the Due Process issue.  Also, regarding the existence of an implied bar, there appears to be no split among Circuits on the issue that typically is a basis for the Supreme Court to review an issue. 

The fact that the Court agreed to hear the case suggests some on the Court are uncomfortable with the current state of the law.

In Ohio, the clean up program of choice for brownfields and industrial sites currently used is the Voluntary Action Program (VAP).  The program is designed to give a tremendous amount of flexibility to property owners and companies in terms of the nature and extent of clean up performed on their property. 

Instead of the traditional "dig and haul" method of cleaning up soil contamination or "pump and treat" contaminated groundwater, the VAP allows the use of both engineering controls and use restrictions.  Both can dramatically lower clean up costs. 

Engineering controls are barriers that prevent exposure to humans or the environment such as parking lots or buildings.  Use restrictions are deed restrictions (i.e. Environmental Covenants) that may prevent development in areas of high soil contamination, prohibit use of groundwater or restrict development to industrial/commercial use.

As long as the owner demonstrates the property meets VAP standards, Ohio EPA will issue a legal release ("covenant not to sue") which states no further clean up is needed. This legal release benefits both the current owner and is transferable to future owners of the property.

Clean Up for Anticipated Future Development

In planning a clean up, it is critical to understand up-front program requirements to obtain you legal release.  Under the VAP, a critical requirement is that the owner must implement some form of remedy for all exposure pathways which exceed VAP standards.  An "exposure pathway" can be any way a human may be exposed to unacceptable levels of contamination. 

Example of Exposure Pathway (Vapor Intrusion)- The most problematic exposure pathway is often vapor intrusion into buildings.  Vapors from soil or groundwater contamination can pass through building floors and expose the inhabitants to, what is deemed, unacceptable human health risks. 

Under the VAP rules, current and "reasonably anticipated" exposure pathways must be addressed through a remedy.  The remedy can be clean up of soil contamination, groundwater treatment, engineering controls or use restrictions. 

While the VAP program has been in existence for nearly 17 years, Ohio EPA continues to struggle with how to address anticipated development under the program.  The VAP requires the future use of the property must continue to be in compliance with VAP standards. 

How do you make that demonstration with regards to future development?

VAP calls future development "reasonably anticipated pathways."  Such a pathway would exist if a developer knows a building will be constructed on the site in the future in an area of the property that has contamination. 

The VAP rules requires that property owners to demonstrate inhabitants of that future building would not be exposed to unacceptable levels of contaminants.  If the area of construction will result in potential exposure above VAP standards, the owner must implement some type of remedy to address that exposure.

Ohio EPA released this week a VAP guidance document designed to assist in evaluating potential exposure pathways- "Reasonably Anticipated Complete Exposure Pathways"

Included in the guidance document is the following statement:

Because development plans are not always known in detail, the identification of a reasonably anticipated exposure pathway for potential development is not always easily done.

That is a gross understatement…even following the EPA guidance.  The VAP rules force the developer or property owner to make judgment regarding the potential size, location and configuration of future buildings.  These crucial development decisions can have dramatic implications for the amount of clean up needed at the site.

What Happens if Development Plans are Uncertain?

Site conditions at brownfields and other industrial properties can vary dramatically.  At some sites the issues of contamination remaining on-site in conjunction with future development can be  balanced.  At other sites, developers can be forced to make decisions regarding the extent of clean up prematurely.

In its second guidance document EPA tries to provide an administrative remedy to balancing the need for completing the VAP and avoiding expensive clean up before development plans are certain.  Ohio EPA suggests carefully crafted environmental covenants can be utilized to satisfy VAP rules, obtain your legal release and provide flexibility for future development.

The guidance is titled "Conducting Remedies in the VAP for Complete and Reasonably Anticipated to be Complete Pathways."

Conclusion

Both guidance documents are highly complex.  While the documents provide some level of flexibility to balance development with clean up, it is clearly a complex balancing act that developers must evaluate early in the process.

 

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.

Rumors abound that the Kasich Administration is seriously considering totally overhauling the Clean Ohio brownfield grant program.  Multiple sources have indicated that the Administration is discussing internally making the next round of Clean Ohio the last for the program in its current form.

During the transportation engineers conference in Columbus, Governor Kasich made remarks that Clean Ohio would be reconstituted.  He said the program needs to improve upon providing funding projects that have the best opportunity to either create or retain jobs.

Back in April I wrote a post titled Clean Ohio Ends 2013….What Next?  In that post I discussed that the Department of Development was planning on four rounds for the competitive Clean Ohio Revitalization Fund (CORF):

  • Round 11 in November 2011 (applications have already been submitted)
  • Round 12 in Award in July 2012 (applications due in January or February)
  • Round 13 in November 2012
  • Round 14 in July 2013

In addition, to the Clean Ohio Assistance Fund (COAF) would receive new funding in July 2012 which would provide assessment (Phase II) funding through July 13.

The Kasich Administration may be planning on scrapping Rounds 13 and 14 and making Round 12 the final round.  If this happens it will make the final round highly competitive with many cities trying to cram projects in at the last opportunity. 

What Next?

There are no details that have been released publicly as to how the remaining funds (Rounds 13 and 14) may be used.  One possibility discussed was the Administration would proactively target sites rather than allow developers to join with cities in filing applications.  Another possibility would be to do away with the Redevelopment Ready and Sustainability Reinvestment tracks that do not require immediate development or jobs.

Its hard to comment on the merits of a new program when details have not been released.  However, there is no doubt the Clean Ohio program is extremely popular with all the cities as well as developers.  The program has been the key to allowing redevelopment on a number of highly contaminated and complex sites that would have otherwise sat idle.  In Ohio, where brownfields are too numerous, the COAF and CORF grants literally forced development onto underutilized or vacant properties. 

Because Clean Ohio was passed by the voters, it seems impossible for the Administration to redirect the money to other programs than brownfields.  However, the Administration does have the latitude to completely reshape the process for how sites get selected for funding. 

We will have to watch to see how it unfolds.  Regardless, it looks rather certain Clean Ohio as we know it will not look the same after the January Round.