Back in 2007, U.S. EPA was sued by some States and environmental groups who challenged the legitimacy of the ozone standard -75 parts per billion (ppb)- selected by the Bush Administration.  In 2009, the Obama Administration announced that it was reconsidering the 75 ppb standard.

U.S. EPA is likely to revise the standard to somewhere between 60 ppb to 70 ppb. (See the map for the implications of a revised standard on the Midwest)

Back in September 16, 2009, U.S. EPA filed a pleading informing the Court that it would finalize the new standard by August 31, 2010. 

 

In curious timing, the U.S. EPA announced it needed two more months and could not finalize the ozone standard until late October. 

Some questioned, including me, whether the delay was a calculated move to make the controversial announcement after the election. (See, prior post)  Now U.S. EPA has announced, once again, it would delay the finalization of the standard.  Only this time the delay would be nearly six months.

On December 8, 2010, U.S. EPA filed a Motion declaring it would need until the July 29, 2011 to complete its review of the ozone standard.  The U.S. EPA said it needed to consult its science advisory board (Clean Air Scientific Advisory Committee- CASAC) due to the significant number of comments and new information it received. 

In the motion, U.S. EPA sets forth its process for finalizing the ozone standard.

  1. U.S. EPA will develop a set of questions for CASAC for its review asking the Committee to review scientific evidence and other information before U.S. EPA
  2. CASAC will hold public meetings to discuss its response to the questions;
  3. CASAC will provide additional written advice to U.S. EPA regarding the new ozone standard; and
  4. New public comment period to provide comments on CASAC review and to U.S. EPA

President’s Executive Order

On January 18th, President Obama’s issued an executive order requiring all federal agencies to evaluate the economic impacts on business of its rulemakings. The executive order directs federal agencies developing regulations to “use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible.”  At its core, the order is intended to force federal agencies to provide greater attention to the potential costs and burden of new regulations on businesses.  

While the motion delaying finalization of the ozone standard was filed prior to the executive order, U.S. EPA’s actions are consistent with the Obama Administration’s overall goal of giving greater scrutiny to the impact on economic growth from regulation.  Only problem is that the U.S. Supreme Court has already ruled that the Clean Air Act prohibits U.S. EPA from considering costs and economic impact when setting the ozone standard. 

U.S. Supreme Court determined in Whitman v American Trucking that U.S. EPA could not consider costs in setting the standard. The Court held EPA can only consider costs if its expressly granted that authority by Congress:

Section 109(b) [of the Clean Air Act] does not permit the Administrator to consider implementation costs in setting NAAQS. Because the CAA often expressly grants the EPA the authority to consider implementation costs, a provision for costs will not be inferred from its ambiguous provisions.

Rather than continuing to manipulate the process by constantly delaying the final ozone standard, perhaps the Administration needs to realize that ozone standards and the National Ambient Air Quality Standards (NAAQS) have huge impacts on the economy. 

Some sort of cost-benefit analysis that allows considerations of costs in setting standards just makes sense. We can’t continue to ignore the impacts of new controls and the Clean Air Act’s restrictions on economic growth imposed on areas that do no meet the standard. 

Its nice to receive recognition every now and again.  Since starting my blog almost three years ago I have met a number of interesting business contacts, clients, reporters and people just interested in the topics I cover.  That has been the most rewarding part of the process.  

However, its still nice to be recognized as putting up quality content by independent publishers with a good reputation.  LexisNexis is currently developing its list of the top 50 blogs covering environmental and climate change topics. 

Despite LexisNexis close connection to the law, the list is by no means limited to law blogs.  Included on the list are blogs focusing on advocacy, science, policy and international topics. If you work in the environmental field or you just have a passion for it, this is a great list of blogs to follow.  I regularly read a number of them.  (Click here for the "LexisNexis Nomination for Top Environmental and Climate Change Blogs")

Below is the company’s description of their selection process and next steps in finalizing the list for best environmental and climate change blogs.

The environmental law and climate change practice area is part of an evolving phenomenon that is being touted in some circles as the next Rule of Law. Nowhere is this global renaissance more apparent than the blogosphere, which has spawned a surprisingly large (and growing) number of blogs in every conceivable niche category.  For the first time, this Community will recognize the thought leaders who share their expertise-and their divergent points of view-with the online world by awarding an honorary designation to the Top 50 Blogs for Environmental Law & Climate Change.

As many of you know, there are blogs, and then there are blogs. As we consider blogs for membership in ELCCC’s Top 50, we look for timely topics, quality writing, frequent posts and that certain something ‘extra’ that keeps a web audience coming back for more. Our readers have come to expect nothing less, and we wouldn’t have it any other way.

An initial list of nominees for ELCCC’s Top 50 blogs for 2011 is set forth below. We welcome and encourage your input. If a blog you like isn’t included, post a comment to let us know and we’ll add it to the list. We’re always looking for new voices with something interesting to say about environmental law and climate change.  

Our top blogs campaign will move ahead in several phases. We’ll start with a comment period that starts today and ends on 14 February, during which we will take additional top blog nominations. From the final list of nominees, we will select the Top 50 Environmental Law & Climate Change Blogs for 2011. Thereafter, we’ll put the matter to a vote and ask all of you-our Community-to pick the Top Blog of the Year.

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

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

One Year Exemption from Penalties

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

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

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

Tax Exemption for Site Remediation Costs

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

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

Conclusion

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Continue Reading Ohio Revamps Brownfield Loan Program

Recently, the Toledo Blade had a story on the recent court ruling regarding the FDS Coke permit.  The FDS permit has been the subject of numerous appeals which have dragged on years.  The 10th Appellate Court recently issued a ruling sending the FDS  permit back to the Environmental Review Appeals Commission for determination of whether construction had begun in order to maintain the validity of the permit.

The FDS permit had a condition that a continuing program of construction must be commenced to maintain the validity of the permit.  The Court said more information was need to determine whether the permit was still valid.

The ruling is largely irrelevant for future air permits due to a legislative change that allows permits to be valid so long as an appeal is pending. R.C. 3704.03(F)(2)(b)(iv) was revised to expressly suspend the expiration clock for air permits during a third party appeal.  It states: 

(iv) The installation permit is the subject of an appeal by a party other than the owner or operator of the air contaminant source that is the subject of the installation permit, in which case the date of termination of the permit is not later than eighteen months after the effective date of the permit plus the number of days between the date in which the permit was appealed and the date on which all appeals concerning the permit have been resolved.

However, its another legislative change to the appeal process that I want to comment on.  The Blade included the following in the story regarding the FDS Coke decision:

In 2005, former Ohio EPA Director Joe Koncelik took the unprecedented action of modifying the permit while it was still under appeal, softening it for FDS. That action was ruled invalid, prompting Gov. Ted Strickland to seek a permanent change in state law that would allow such modifications to occur. The Ohio General Assembly approved it, giving greater power to state EPA directors.

The permanent change referenced was Am. Sub. H.B. 119 (September 2007) which modified the language in Revised Code 3745.04 to state:

The environmental review appeals commission has exclusive
original jurisdiction over any matter that may, under this
section, be brought before it. However, the director has and
retains jurisdiction to modify, amend, revise, renew, or revoke
any permit, rule, order, or other action that has been appealed
to the commission.

The story implies that the bill was some sort of power grab for Director’s of Ohio EPA.  In fact, it is necessary authority given the reality of our permit appeal process. 

It is not unusual for permits to be under appeal for years.  During that time period circumstances can change that warrant modifications, revisions or revocation of a previously issued permit.  It could be changing regulations or environmental conditions that push the need for the change. 

If the law was left as it stood after the ruling saying Director’s could not modify permits under appeal, it would effectively freeze these action in time while ever changing environmental conditions and regulations march forward.  The legislative change was a logical reaction to this reality.

 

 

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

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

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

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

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

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

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

Ohio Signs Emergency Rules to Prevent Regulation of Small Sources

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

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

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

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

Last week, Governor-Elect Kasich named the new Director’s for Ohio EPA (Scott Nally) and the Ohio Department of Natural Resources (David Mustine).  At the press briefing, Kasich reiterated his election theme of returning business growth to Ohio.  This from the Columbus Dispatch:

"These departments are going to send a message to Ohio that we are open for business," Kasich said in naming Scott Nally of Indiana as head of the EPA and former American Electric Power executive David Mustine as director of Natural Resources.

Kasich, a former Republican congressman who will take office Jan. 10, emphasized that he doesn’t plan to empower business at "the cost of environmental degradation." But in the next breath, he said he wants to "exploit the wonders of our state."

"When you have something that’s really valuable, use it," he said in a briefing at the Rhodes Tower. That includes drilling for oil and gas in state parks and on state land, he said.

Additional Background on Both Appointments

Scott Nally

Current Title: Assistant Commissioner, Office of External Affairs for IDEM

Degree(s): Master of Science from University of Wyoming; Bachelor of Science in Biological Sciences from North Carolina State University

Special license(s): Wastewater Operator certified in Indiana and Virginia; Pesticide Applicator License certified in Indiana

Experience: Regional environmental manager at Perdue Farms Incorporated; numerous publications; held various positions in the environmental and biological sciences; served as president, chairman or board member on various county boards

David Mustine

David Mustine was a Senior Vice President for American Electric Power (AEP) for European business development.  More recently he had his own consulting business. He also served as an investment manager for a Bechtel Group.  He has a B.S. in business from Ohio State, an MBA from DePaul and a MA from Ashland Seminary.

Appointments Consistent with Kasich "Business" Theme

The Governor Elect was all about jobs, jobs and jobs during the election.  He said a key to addressing Ohio’s high unemployment rate was creating a better business climate.

Both appointments appear consistent with those themes. Scott Nally served in The Indiana Department of Environmental Management (IDEM) which has been under the leadership of Tom Easterly since 2005 when Governor Mitch Daniels appointed him Commissioner.  Easterly has  had a strong emphasis in running IDEM with an eye toward assisting business in navigating complex environmental regulations. 

Mustine’s background at AEP will certainly be viewed with a skeptical eye by many environmental groups in Ohio.  However, he brings a unique business background to a organization whose past two Directors were much more political- both were former State Senators. 

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

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

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

Curious Timing for Re-Release

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

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

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

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

The D.C. Circuit Court of Appeals has rejected an industry request to delay implementation of U.S. EPA’s greenhouse gas permitting requirements.  Industry had requested a stay on the effectiveness of the rules while it proceeds with its full legal challenge to the Agency’s Endangerment Finding. 

(Prior Post Discussing Lawsuit and Industry Arguments for Blocking the Effectiveness of the EPA GHG Rules)

Beginning in a matter of weeks, large new and modified sources of greenhouse gases will be required to analyze available methods for reducing emissions of GHGs as part of the federal permitting process- New Source Review Program.

Attention will now most assuredly turn to Congress which will debate legislative proposals to place either a temporary or permanent hold on implementation of the EPA rules.  However, there is no doubt such legislation is not going to happen quickly.  Therefore, implementation of the EPA requirements will commence in January.

Best coverage of the story appeared in the Washington Post.  The article offered these two perspectives on the Court’s decision:

Scott Segal, a lobbyist at Bracewell Giuliani, a firm that represents utilities, refiners, cement companies and manufacturers, said that if companies can’t meet requirements, then "the court may have ensured an effective construction moratorium for industrial and power projects. Given the state of the economy, the decision is certainly not a welcome holiday present."

But Nilles said that companies were exaggerating the difficulty of meeting EPA standards. He said that years ago when regulations about acid rain were imposed, "industry promised that the sky would fall, and it didn’t."

 

Boiler MACT Rules-  On December 7th, EPA filed a motion with the Court requesting more time in order to re-propose the Boiler MACT rules and allow for public comment.  In EPA’s motion to the Court, EPA sets forth following timetable if its motion is granted to move impending January deadline is moved to April: it will publish revised proposals no later than June 1, 2011, and promulgate the final emission standards no later than April 13, 2002. 

EPA states that more time is needed because significant issues with the proposed standards were raised in the public comment period and it needs more time to evaluate the technical merits of those comments.  This from EPA’s motion:

As evidenced by the number of comments, which include a substantial amount of
additional new data, the major source boilers, area source boilers, and CISWI rules will have far reaching effects. Estimates of the monetized value of the public health benefits for all three rules combined range from $18 billion and $44 billion. The economic impacts of implementation of these standards will also be significant and vary by rule. For example, the nation-wide capital cost for the proposed major source boilers rule was estimated to be $9.5 billion in the year 2013, with a total national annual cost of $2.9 billion in the year 2013. The major source and area source boilers rules are expected to apply at almost 200,000 boilers at over 90,000 facilities. On balance, given the broad impact these rules will have, EPA believes that the overall public interest is best served by allowing EPA to re-propose the rules so that the Agency will be able to issue emission standards that are based upon a thorough consideration of all available data and reduce potential litigation risks.

Many are very relieved that EPA has decided to take a second look at its proposed standards.  The rules have wide ranging applicability and huge costs associated with them.

U.S. Supreme Court to Hear Climate Change Nuisance Case-  The Supreme Court has agreed to hear an appeal of Second Circuit’s decision in American Electric Power v. Connecticut.  The lower court allowed several states, municipalities, and environmental groups to pursue a federal public nuisance action against a group of electric power producers for their emissions of greenhouse gases (GHGs). 

The issue of GHG emission contributing to climate change is global issue with millions of sources contributing.  The Court will examine how much a single subset of sources should be exposed to liability for their contribution to the issue.  

The lower court found the Plaintiffs showed the requisite grounds to bring the suit.  The Court found plaintiffs properly identified an injury, presented causation and redressability that should allow the suit to go forward.   The Supreme Court granted the petition to hear the appeal to review this determination.

Also at issue is whether federal nuisance actions have been displaced by U.S. EPA’s recent promulgation of climate change regulations (monitoring, Endangerment Finding, Light-Duty Vehicle Rule, Tailoring Rule).  Federal nuisance actions are no longer available if it is determined that their is sufficient federal action to address the issue. 

If the Court finds federal nuisance action has been displaced by EPA’s regulations, this may prove to by a phyrric victory for some.  Presumably, federal nuisance is only displaced so long as those regulation remain in place.  What should happen if congressional action delays implementation or litigation successfully overturns the Endangerment Finding?

Regardless, this will be a fascinating case to follow next year.