All the recent climate change related litigation has overshadowed major activity around control of hazardous air pollutants (HAPs) from coal plants.  Mercury is one such HAP.  Back in February 8, 2008  in New Jersey v. EPA, the D.C. Circuit Court of Appeals threw out U.S. EPA’s cap and trade program for mercury, known as the Clean Air Mercury Rule (CAMR).  

EPA’s decision to create a cap and trade program for mercury was very controversial.  Those opposed said cap and trade was not meant to control toxic pollutants like mercury.  In response, a number of states rejected the CAMR rule and adopted state programs that established control requirements for every coal plant within their borders.

While the federal court declared CAMR illegal, it also made an important determination as it relates to control of HAPs from coal plants.  In order to create the cap and trade program, the Bush Administration had to undue the efforts of the Clinton Administration to establish facility specific control standards for coal plants under Section 112 of the Clean Air Act. 

In December 2000, the Clinton EPA decided to list electric generating units (EGUs) under section 112.  By listing this source category under Section 112, all existing and new plants must meet Maximum Available Control Technology Standards (MACT) for controlling emissions of HAPs.  MACT is emission controls equal to the "average emission limitation achieved by the best performing 12 percent of the existing sources."

In order to create its cap and trade program, the Bush Administration tried to de-list EGUs as a source category regulated under Section 112.  The federal court in New Jersey v. EPA found this action to be illegal.  This means that EPA must move forward with rules establishing a MACT standard for EGUs.  To date, EPA has failed to take such action.  As reported in the Charleston Gazette this week, groups have sued EPA to compel such action. 

A coalition of environmental groups has filed a lawsuit trying to force the federal government to comply with a 6-year-old mandate to reduce toxic chemical emissions from coal-fired power plants.

The suit, filed Thursday in federal court in Washington, asks for a court order requiring the U.S. Environmental Protection Agency to set limits for mercury and dozens of other hazardous air pollutants.

The new lawsuit follows a major decision by a federal court in North Carolina (Southern Alliance for Clean Energy v. Duke) that invalidated a permit for construction of a new coal plant because the permit failed to show compliance with MACT for HAPs.  The main issue in the case was whether the MACT standards apply to the on-going construction of a coal plant following the New Jersey decision.  Notably, the Court ruled that MACT did apply even though the permit was issued and construction had already began on the new source.

While mercury and other HAPs won’t be controlled from existing plants until EPA finalizes its MACT standards for EGUs, at least one federal court has said new plants must meet the yet to be established standard.  This presents another avenue for environmentalists to challenge air permits for coal plants, even permits issued prior to the February 8, 2008 decision.

When the Environmental Review Board (EAB) issued its decision in Deseret Power, the Sierra Club and many others across the Internet declared victory claiming the decision would block permits for new coal fired power plants for the immediate future.  Looks like they may have been premature…  

The EPA issued a significant interpretive memorandum in response to the Deseret Power case which states CO2 is not a regulated pollutant under the Clean Air Act.   While more litigation will ensue, the permitting process can move forward on pending permits for new coal plants.

Background on Deseret Power

At issue in Deseret Power was whether controls were required (BACT) for CO2 for new coal-fired power plants.  Under the Clean Air Act, controls are required for CO2 if it is a "regulated pollutant." The Sierra Club pointed to provisions requiring monitoring of CO2, arguing those provisions were sufficient to be deemed "regulation."  EPA said monitoring requirements were insufficient and that past interpretations dictated a conclusion that monitoring was not enough to qualify as regulation.

As indicated in my post on the decision, the EAB in essence punted on the issue.  They rejected the Sierra Club’s argument that the plain text of the Clean Air Act required regulation.  They also rejected the EPA analysis that past interpretations required it to conclude monitoring was not enough to trigger the need for controls.  However, the EAB said EPA has discretion to decide whether monitoring is enough to trigger the need to control through a new binding interpretation of what is sufficient to be considered a "regulated pollutant."

EPA Fills the Vacuum Left By the EAB

Here is Administrator Johnson’s review of the EAB order, recognizing the discretion his agency retains:

The Board agreed with the Region and OAR that the statutory phrase "subject to regulation under this Act" is ambiguous. However, as discussed above, the Board also concluded that the Region’s reason for not including a BACT limit for C02 in the permit – that it was bound by a historic interpretation of the phrase "subject to regulation" – was not supported by the administrative record for the permit. Id. Thus, the Board remanded the permit to the Region to "reconsider whether or not to impose a C02 BACT limit in light of the Agency’s discretion to interpret, consistent with the CAA, what constitutes a ‘pollutant subject to regulation under this Act."’ The EAB also encouraged EPA offices to consider whether to undertake an action of nationwide scope to address the interpretation of the phrase "subject to regulation under the Act."

After citing to EPA’s discretion, EPA concludes monitoring is insufficient to trigger controls for CO2:

EPA interprets the definition of "regulated NSR pollutant" in 40 C.F.R. 8
52.21(b)(50) to exclude pollutants for which EPA regulations only require monitoring or reporting but to include each pollutant subject to either a provision in the Clean Air Act or regulation promulgated by EPA under the Clean Air Act that requires actual control of emissions of that pollutant.  This interpretation is supported by the language and structure of the regulation and sound policy considerations.

EPA supports its interpretation by looking at the dictionary definitions of the words "subject to regulation."  However, this justification is pretty close to the one put forward to the EAB in the appeal which the EAB rejected.   EPA further supports this interpretation by arguing it amounts to sound public policy:

Furthermore, an interpretation that preserves the Agency’s ability to gather information to inform the Administrator’s judgment regarding the need to establish controls on emissions without automatically triggering such controls in no way limits the Agency’s authority to require controls on emissions of a particular pollutant when the Administrator determines they are warranted. This
interpretation preserves the Administrator’s authority to require control of individual pollutants through emissions limitations or other restrictions under various provisions of the Act, which would then trigger the requirements of the PSD program for any pollutant addressed in such an action.

EPA also attempts to create a better record in support of its interpretative ruling by citing to a series of previous permitting decisions that are consistent with this approach.  The permits arguably "demonstrate that EPA has not in practice issued PSD permits establishing emissions limitations for pollutants that are subject to only monitoring and reporting requirements."

Observations

  1. More Litigation to Follow:  This interpretative memo will be challenged.  EPA certainly builds support for its interpretation, most notably by citing to a series of prior permit decisions that are in harmony with its interpretation. However, it is principally relying on a similar textual interpretation of the phrasing of the Clean Air Act that had, in part, been rejected by the EAB in Deseret.
  2. EPA Rushed to Issue the Memo Before the Change in Administration:  The EAB recognized EPA had discretion to go either way in deciding to regulate CO2 under the Clean Air Act.  The Bush Administration did not want to allow this decision to be made by the next Administration, so it issued the memo without allowing for public comment which would have delayed finalization of the memo.  Administrator Johnson justifies cutting out public comment by citing to the need to keep the permitting process moving forward because a large number of permits put in limbo following Deseret. 
  3. The Bush Administration’s action ties the Obama Administration hand for the short term:  Administrator Johnson’s memo cites to a series of cases that "recognized that an Agency has the flexibility to establish an initial interpretation of a regulation without engaging in a notice and comment process."  This memorandum is meant to be that "initial interpretation", which means the Obama Administration could not change it without going through a formal rulemaking process with a public comment period.  In the short term, this action keeps the permit processing moving forward for nearly 100 pending permits.

 

To quote a consultant I work with…"Times must be tough in Ohio when there is free money left on the table" for redevelopment. 

Today, the Clean Ohio Council met to evaluate the project proposals for Round 5 of the Clean Ohio Revitalization Fund.  There was $17 million in grant funding available.  In the previous 4 rounds, CORF was so competitive many projects were left without funding.  As perhaps an indication of the economy, Round 5 was the first time ever all of the money available was not awarded. 

Here is the typical process at the meetings where the Clean Ohio Council makes its decisions about which projects to fund- There is a brief presentation made to the Council about each project. The Council can asked questions to better understand the project or raise concerns.  After the presentations, the members of the Council vote on the project and each project receives an overall score.  The Council breaks for lunch and afterward the Staff of the Ohio Department of Development reveal which projects will get funded.

I used to sit on the Clean Ohio Council and experienced very competitive grant rounds where a number of projects did not get funded.  Due to the time and effort to put a application together, you could hear the audible sighs in the audience from those left out of the money.  No such sighs were heard today….

At today’s meeting, Council broke with tradition and did not even bother scoring all the projects.  The total request for all eligible projects was only $12 million of the $17 million available.  Therefore, the Council simply passed a resolution to award all eligible projects the funding they requested. 

I worked on one of the projects that was selected for award.  The project is a great story of a closed manufacturing site getting cleaned up and returned to productive use.  The Clean Ohio program has had many success stories like this in the years it has been operating.  I hope the next round of funding sees renewed interest, it would be a shame to leave "free" redevelopment money on the table that could be put to good use. 

 

President Elect Obama has prided himself on appointing a mix of opinions in his cabinet and senior advisors.  For example, his National Security team is made up a former political rival and a Republican from the Bush Administration.  Obama has said he studied history and identified a possible issue in past presidencies is not fostering a diverse mix of opinions to debate policy.  Here is what the President Elect said after making his National Security appointments:

“One of the dangers in a White House, based on my reading of history, is that you get wrapped up in groupthink, and everybody agrees with everything, and there’s no discussion and there are not dissenting views,” Obama said, voicing a frequent criticism by some senior Bush-administration alumni.
“So I’m going to be welcoming a vigorous debate inside the White House. But I understand, I will be setting policy as president.

The diversity that was plainly evident in his Naitonal Security team seems to be missing on his Green Team.  Carol Browner as Climate Czar and past senior managers at EPA will fill the other important environmental posts. The announced appointments have met with a mix of reviews.  The USA Today praised the choice in an article title"Obama’s Dream Green Team is Warmly Received." 

One is a Nobel Prize winner overseeing research of alternative energy. The three others all have one thing in common: experience working for the Environmental Protection Agency…

"This is clearly a green dream team," said Gene Karpinski, head of the League of Conservation Voters, an environmental group. "These people have shown they can get the job done."

Obama has mustered an "impressive team of experienced and capable leaders," said Tom Kuhn, president of the Edison Electric Institute, a group representing electric companies.

As an opposing view, the Wall Street Journal blasted the environmental appointments in an editorial:

The EPA long ago became the government arm of the environment lobby, but Ms. Browner was especially political. During her EPA salad days, she put out air-pollution standards that even the agency itself said would have no measurable impact on public health, purely as antibusiness punishment. She forced GE to dredge the Hudson River of PCBs that posed no threat to the public. Ms. Browner also rewrote a law called New Source Review so that power plants, refineries and other industries were always breaking the particulate emissions rules….

As for the "team of rivals" hype, the rest of Mr. Obama’s energy list is heavy with Ms. Browner’s acolytes. Lisa Jackson, for 16 years a top EPA enforcement officer, will now run that agency. At the White House Council on Environmental Quality will be Nancy Sutley, who was Ms. Browner’s special assistant at EPA.

The Washington Post noted the commonality in the appointments in their piece covering the appointments titled "Seasoned Regulators to Lead Obama Environment Program." :

Word of their appointment was greeted enthusiastically yesterday by some environmental groups. The League of Conservation Voters called the group a "green dream team."

Industry groups were more cautious. At the U.S. Chamber of Commerce, Vice President William Kovacs said the group worried that the new officials would use their power to limit greenhouse-gas emissions and impose painful new costs on energy use.

"I think that they could be aggressive, and we’re hoping that they’re really going to look at the circumstances" of the economic downturn, Kovacs said. "That is our biggest single concern, because literally all three of them have a regulatory bent."

Regardless of your opinions of any of appointments as individuals, it is hard to see a wide divergence of opinion emerging.  While there is no doubt seasoned veterans are needed to develop and implement a game changer like climate change legislation, I agree with the President elect…a diversity of opinion is a valuable asset that can improve decision making.

 

Is the Court showing signs that it may have gone too far is throwing out CAIR?  After EPA filed a request for rehearing, a hopeful sign emerged last month when the Court asked the parties challenging CAIR to respond to two questions:

  1. Does any party really want the entire rule thrown out (vacatur)?
  2. Should the Court stay the effectiveness of its decision to throw out the rule until EPA fixes and re-issues a new rule addressing the Court’s issues?

In response, twenty-two (22) states, including North Carolina, told the Court they don’t want the rule thrown out.  The States requested the Court to stay the effectiveness of its decision to allow EPA to fix the rule.  However, North Carolina was concerned with how much time EPA would have to fix the rule-it opposed an indefinite stay.  Rather, N.C. proposed a deadline of July 2009 after which the stay would end. 

The Utilities were split on the issue.  Some asked for the rule to be thrown out, while others preferred remand.  The argument in support of throwing out CAIR can be summed up by this quote from the brief filed by the Florida Association of Electric Utilities:

Regulatory certainty is critically important, and granting rehearing or staying the mandate would require CAIR states to immediately implement, and affected sources to immediately comply with a rule the Court has declared contains "more than several fatal flaws."

The Utilities opposing remand or a stay ask a valid question- What portion of a "fundamentally flawed" program are going to remain after EPA fixes the rule.  EPA has said it will take 2-3 years to fix CAIR.  The Utilities argue why should they be forced to comply with provisions of the rule that Court has said are fundamentally flawed for the next several years.

U.S. EPA also filed a brief in response to the two questions posed by the Court.  EPA says it prefers a stay of effectiveness of the vacatur decision while it fixes the program.  However, it also says it must have rehearing on certain critical issues or CAIR will be ineffectual at reducing pollution even if the Court grants a stay.

Principally, U.S. EPA wants rehearing on the Court’s decision that EPA does not have the authority to adjust Title IV (acid rain) allowance under the CAIR program.  Without the authority, EPA argues it cannot create a program that will impose greater reductions of SO2 emissions. This would mean the less stringent caps under the old Acid Rain Program will remain.

EPA says this will also impact the emission reductions achieved during a potential stay.  Without clear authority to adjust Acid Rain caps and allowances, Utilities will have no incentive to hold banked allowances for future compliance.  This is because Utilities will not anticipate a stronger program will emerge after EPA fixes the rule.  Rather, Utilities will simply use up the allowances during the stay and emission reductions will not occur.

EPA raises an interesting issue-  Even if a stay is granted there will be tremendous uncertainty as to what the Utilities will do with allowances during the stay.  While EPA makes a valid point, they may have ended the possibility of a stay if the Court is unwilling to reconsider its position that the rule is fundamentally flawed. 

Given all the posturing by the Parties, it will be interesting to see what course of action the Court takes in response.

There appears to be growing awareness that the CAIR decision has major implications beyond just the Utilities. For instance, what about upcoming deadlines for attaining federal air quality standards (NAAQS)?  Without the CAIR SO2 reductions States will likely not be able to comply in time.  Should the State’s be punished for EPA’s failure to develop a legally enforceable program?

In yesterday’s U.S. News and World Report  there was an article covering the uncertainty that swirls around the future of clean air post CAIR.  

Five months after a federal court struck down the Bush administration’s top program aimed at curbing air pollution, the fate of air quality regulation—and, therefore, air quality—in much of the country is increasingly uncertain, if not imperiled.

I was interviewed for the story and was able to point out that the States can’t fix air quality issues on their own.  Federal help through programs like CAIR is needed to address what is a regional issue, not a local issue.

"In the case of fine-particulate pollution, there is a huge regional soup of it," says Joseph Koncelik, an Ohio-based environmental lawyer and the former Ohio EPA director. "So, it’s somewhat ineffective if states are working on their own, just trying to control a few factories in their jurisdiction."

If the Court doesn’t grant the stay and issues its mandate effectively throwing out CAIR, will EPA  still hold the States accountable for the 2010 deadline to meet the fine particle standard (PM 2.5)?

Senators Stabenow and Feingold are trying to build support for Great Lakes funding in the economic stimulus package being developed.  The following letter is being circulated as a way of showing support for inclusion of funding. 

The letter highlights the traditional areas identified for Great Lakes Restoration- contaminated sediment, combined sewer overflows and eco restoration. 

 

Dear Majority Leader Reid and Minority Leader McConnell:

As you move forward with an economic recovery package for our nation, we strongly urge that you include funding that will protect and promote jobs by restoring and protecting one of our most important natural resources – the Great Lakes. In particular, we urge you to provide funding for the Great Lakes Legacy Act, the Clean Water State Revolving Fund, and the Great Lakes Fish and Wildlife Restoration Act. These investments will put people to work cleaning up toxic sediments in our region’s rivers and harbors, ending decades of sewer overflows into 95 percent of our nation’s fresh surface water, and restoring hundreds of acres of vital wetlands and habitat.

Since 2002, cleanups funded under the Great Lakes Legacy Act have removed nearly a million cubic yards of toxic sediments from rivers and harbors in the Great Lakes. These cleanups—a priority under the Great Lakes Regional Collaboration plan—are creating thousands of jobs and opportunities for additional economic development in Detroit, Cleveland, Milwaukee, Buffalo, Gary, Duluth and other Midwest urban areas. By investing $262.0 million in 2009 and an additional $240.0 million in 2010 for toxic sediment cleanup projects, which were identified by our states, we can put thousands of people to work in struggling urban areas throughout our region. According to our states, these projects are ready to go and spending these funds can immediately begin to create jobs and economic activity in our region, with lasting impacts.

Another job-generating opportunity is investing in the Clean Water State Revolving Fund. By investing in clean water infrastructure, we can put people to work tackling an important challenge of our times: aging water infrastructure and associated environmental, public health, and economic costs. It is estimated that for each $1 billion invested in clean water infrastructure, 47,000 jobs are generated. We recommend that the recovery package invest $10 billion in the Clean Water State Revolving Fund, resulting in 470,000 jobs nationally. In the Great Lakes region alone, a $10 billion national investment translates into $3.7 billion for the region and over 170,000 jobs that can establish a modern and environmentally sound water infrastructure system.

The negative economic impacts of aging infrastructure are well documented throughout the region and nation: from sewage-related closures every summer at Great Lakes beaches and water-borne illnesses and deaths to road damage, such as sinkholes caused by breaking water infrastructure. Old and ailing waste water treatment facilities are the cause of more than 23 billion gallons of raw sewage entering the Great Lakes in 2006. Stresses on our aging infrastructure are further compounded—until Congress acts—by reduced stream and wetland protections under the Clean Water Act as a result of recent Supreme Court decisions, further taxing water infrastructure that must compensate for lost natural filtration and water storage functions, for example. Also, climate change is expected to bring heavier rains that will inundate overtaxed waste water systems and lead to increased untreated sewage overflows in the Great Lakes. Addressing all of these threats will ensure the economic vitality of the Great Lakes and the nation’s resources, which we all depend on for jobs, drinking water, and quality of life.

We also support investing in ecosystem restoration programs, such as the U.S. Fish and Wildlife Service’s Great Lakes Fish and Wildlife Restoration Act program, to fund wetlands and habitat projects. Restoring habitat, aquatic ecosystems, and wetlands not only can reduce the overall cost of water infrastructure projects; they also contribute to our state’s hunting, fishing, and wildlife watching economies. These projects will also immediately generate jobs on par with other infrastructure pursuits–a $130 million dollar investment in ready-to-go restoration projects in the Great Lakes region will generate nearly 3,000 jobs.

We look forward to supporting legislation that builds economic opportunity and puts people back to work while enhancing environmental quality. Investing in clean water infrastructure, toxic sediment remediation, and habitat restoration accomplishes all three goals. We urge you to include these investments in the recovery package that we will consider next year.

Sincerely,

cc: Senator Boxer, Chairman, Environment and Public Works
Senator Inhofe, Ranking Member, Environment and Public Works

(Photo: flickr vice48sr5005/everystockphoto.com)

After the Supreme Court issued its decision in Rapanos, a lack of clarity persists as to how to determine whether a waterway or wetland is federally protected under the Clean Water Act.  This of course pretty critical in deciding which types of permits you may need to impact a stream or wetland.

On December 2nd, the Army Corps of Engineers and EPA released a new guidance document that builds upon earlier guidance.  The guidance provides more insight into what factors will be used to determine federal jurisdiction. 

Rapanos contains two tests for determining federal jurisdiction.  The plurality test and the significant nexus test created by Justice Kennedy.  A key debate since the Supreme Court decision in the lower courts has been whether one or both tests should be used to determine jurisdiction.  The new federal guidance makes clear the EPA/Corps position is that both tests should be applied.

Here is recap of the two tests that emerged from Rapanos:

  1. Significant Nexus Test- (Justice Kennedy) Federal Clean Water Act Jurisdiction extends to all waterways that have a "significant nexus" to a navigable water. A "significant nexus" occurs "if the wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity of other covered waters more readily understood as `navigable
  2. Plurality Test- (Just Scalia) The test developed by the plurality has a more narrow focus than the Kennedy test.  Under the test, federal jurisdiction extends to only "relatively permanent, standing or continuously flowing bodies of water"

The new federal guidance creates three groups of waterways and wetlands- those that are categorically federal waterways, those where a fact specific analysis will be performed and those that are not federally protected.  A quick summary of the key factors for each category is set forth below:

 Categorical Federal Waters-  The following waters will be considered federal waters:

  • Traditional Navigable Waters- which include waters currently used, or were used in the past, or may be susceptible to use in interstate or foreign commerce
  • Wetlands adjacent to traditional navigable waters– (adjacent = 1) unbroken surface or subsurface connection; 2)  only separated by man-made barriers like a dike; or 3) science supports conclusion ecologically connected)
  • Non-navigable tributaries of traditional navigable waters that are relatively permanent where they have flow year-round or seasonal flow (typically three months)
  • Wetlands adjacent to these permanent non-navigable tributaries

Fact Specific "Significant Nexus" Test-  The Corps will have to engage in a fact specific analysis of the ecological factors in deciding whether to extend federal jurisdiction to non-adjacent or non permanent waterways justifies.  The fact specific analysis will include:

  • Examination of the flow characteristics and functions of  the tributary and any adjacent wetlands to determine whether such tributary has a significant effect on the chemical, physical and biological integrity of downstream traditional navigable waters.
  • Principal considerations when evaluating significant nexus include the volume,
    duration, and frequency of the flow of water in the tributary and the proximity of the
    tributary to a traditional navigable water
  • In examining flow, physical indicators of flow may include the presence and characteristics of a reliable ordinary high water mark (OHWM) with a channel defined by bed and banks. Other physical characteristics include shelving, wracking, water staining, sediment sorting, and scour.
  • Extent to which the tributary and adjacent wetlands have the capacity to carry pollutants (e.g., petroleum wastes, toxic wastes, sediment) or flood waters to traditional navigable waters, or to reduce the amount of pollutants or flood waters that would otherwise enter traditional navigable waters
  • Evaluate ecological functions such as the capacity to transfer nutrients and organic carbon vital to support downstream foodwebs (e.g., macroinvertebrates present in headwater streams convert carbon in leaf litter making it available to species downstream), habitat services such as providing spawning areas for recreationally or commercially important species in downstream waters

Non-jurisdictional waterways or wetlands-  The Corps will not extend federal Clean Water Act jurisdiction to the following waters and wetlands:

  • Swales or erosional features (e .g., gullies, small washes characterized by low volume, infrequent, or short duration flow)
  • Ditches (including roadside ditches) excavated wholly in and draining only uplands and that do not carry a relatively permanent flow of water

COMMENTARY:  While the guidance provide additional insight, legislative clarity is needed.  It should not take a 13 page memo that includes vague standards to determine whether a waterway or wetland is within federal jurisdiction.  Such a complex test is prone to inconsistent application.  We need a more straightforward test so its clear to everyone. 

 

 

Senator Tom Niehaus has introduced S.B. 372 bill to extend the effectiveness of Ohio’s Environmental Audit Privilege law for another five years.  The law is set to expire on January 1, 2009.  It was a hard fought battle for businesses to get the Audit Privilege law on the books in the late 90’s.  While the law was watered down to address U.S. EPA concerns, it remains a valuable tool for some businesses. The law is intended to reward those companies that proactively evaluate their compliance with environmental requirements. 

What is the Ohio Environmental Audit Privilege law?  It is provides immunity from civil penalties if a company voluntarily discloses environmental violations to the appropriate State Agency that were uncovered as a result of an environmental compliance audit.  Note: a civil penalty can still be assessed even after a valid disclosure if the company enjoyed a "economic benefit" as a result of the violation, meaning delayed compliance gave it a competitive advantage.

As a further incentive to utilize the law, the content of an environmental audit report is privileged and not admissible as evidence in a civil or administrative proceeding. (See R.C. §3745.71(C) for exceptions to the privilege provisions)  This provision is meant to reduce exposure to third party suits as a result of environmental violations.

How frequently do businesses use the Audit Privilege Law?  In my experience the law has been used infrequently by Ohio businesses.  During my time at the Ohio EPA, I oversaw the processing of Audit Privilege disclosures.  I would estimate that the Agency received, on average, around four or five disclosures per year during my tenure. 

Why isn’t the Audit Privilege Law used more frequently?  I was always puzzled why more companies did not take advantage of the Audit Privilege law.  Some may believe it is better to correct the violation and wait and see if it is discovered by the Agency.  With so many entities to inspect, some companies think it is better to take this risk the violation is discovered than have their disclosure denied for a technical flaw and face an enforcement action.

Other companies may think the administrative costs of performing an audit are too high.  Or some may be under the mistaken belief that Ohio’s five year statute of limitations on environmental enforcement actions provides a better shield from penalties.  Just keep in mind that the trigger for the statute of limitations in R.C. §3745.31 is when the Agency "actually knew or was informed" of the violation.  So the Agency must be aware of the violation for the clock to run.

What are some of the reasons a request for coverage is denied?  The disclosure must be voluntary, which means it must not be required by some environmental law.  During my time at Ohio EPA, by far the most frequent reason a company was denied coverage was the disclosure of the violation was required by some other environmental law.  Of those companies denied coverage for this reason, most were Title V permitted sources under the Clean Air Act.   Title V sources are required to disclose violations as part of their permit terms and conditions.  However, even in these cases, the Agency frequently reduced penalties to reward the early disclosure of violations.

Here are additional requirements to be deemed a voluntary disclosure (See R.C.§3745.72(B)):

  1. Prompt disclosure
  2. Reasonable effort to achieve compliance as quickly as practicable
  3. Cooperate with the State Agency who is charged with investigating the disclosure
  4. Disclosure not required by law, prior litigation, or a prior order
  5. The company disclosing has no knowledge or reason to know of an Agency had previously commenced an investigation or enforcement action regarding the violations

What is involved in filing a disclosure to the appropriate state agency?  Unlike environmental permitting or grant applications, the submission to Ohio EPA to receive coverage under the Audit Privilege law is actually pretty minimal. R.C. §3745.72(C) requires that all disclosures must be in writing, dated, and hand delivered or sent by certified mail to the Director.  The written disclosure must include the following information: 

  1. the name, address, and telephone number of the owner or operator of the business making the disclosure;
  2. the name, title, address, and telephone number of one or more persons associated with

    the owner or operator who may be contacted regarding the disclosure;

  3. a brief summary of the alleged violation of environmental laws, including, without

    limitation, the nature, date, and location of the alleged violation to the extent that the

    information is known by the owner or operator; and

  4. a statement that the information is part of an environmental audit report and is being

    disclosed under R.C. §3745.72 in order to obtain the immunity provided by that section.

Are there good reasons to use Ohio’s Environmental Audit Privilege Law if it is renewed?  Yes.  During my tenure, I was not aware of any enforcement action that was pursued against a company that made a valid and voluntary disclosure.  Just make sure you are not required to report by some other environmental law. 

I think the law may be ideal for companies that recently purchased a new facility or company.  Performing an environmental audit after such an acquisition is an excellent way to ensure your house is order. 

Also, the audit is a good way to have a third party to evaluate your compliance status.  You can always choose to not file the disclosure if you think its not to your advantage for some reason.

DERG Round Two Schedule:  Tentatively, Ohio will begin soliciting grant applications on December 15th for the second round of funding under the Diesel Emission Reduction Grant (DERG) program administered by the Ohio Department of Development (ODOD).  DERG will have approximately $11.2 million in available funding in the second round.  The grants pay for retrofits of emission controls, engine rebuilds, and a portion of the purchase price of new diesel vehicles.  Here are the tentative dates as discussed in a meeting with ODOD last week: 

  • Monday, Dec. 15: release of the RFP with a press event, media release and posting of application documents on the website.
  • Monday, Jan. 12 at 10 a.m.: first of two bidders conferences
  • Monday, Feb. 9 at 10 a.m., second bidders conference
  • Monday, March 2, applications due
  • The selection team will take up to 60 days to review, score and forward successful applications to the Federal Highway Administration. Projects selected for funding will be notified by May 1, 2009

Grants are available to both public and private entities.  Because the source of funding is the federal Congestion Mitigation Air Quality (CMAQ) program, private companies must enter into a contract (called a Public Private Partnership- PPP) with a public entity.  The money follows from the state to the the public entity who then reimburses the company. 

What Does DERG Pay For? Diesel grants are a great way to pay for fuel saving equipment, like auxiliary power units (APUs), that reduce idling.  Engine or vehicle replacements can be partially funded through the DERG program.  Also, companies who want a greener fleet for contract bidding or as part of the company’s sustainability efforts can pay for retrofits that dramatically reduce emissions from their diesel engines.  All applications require a twenty percent (20%) match.

Issues With Round One of DERG:  As discussed in prior posts, the DERG program experienced significant problems and delays in the Round One of funding. Most notable, 42 applications were filed in round one, but only 10 applications were deemed complete- all of which received funding.  As a member of the Ohio Diesel Coalition, we have advocated for a series of improvements to the grant application process to ensure a transparent and competitive grant process.

Improvements to DERG Round Two:  Last week, representatives of the Ohio Diesel Coalition, including myself, met with members of an inter-agency team working on the DERG program to review changes to the program. The State’s inter-agency team is composed of officials with the Ohio EPA, Ohio Department of Development and Ohio Department of Transportation.  To help improve the overall application process and to ensure complete applications are submitted, the inter-agency team will put in place the following changes for Round Two:
 

  1. A concisely written Request for Proposals (RFP) will be released by ODOD
  2. A template of the Public Private Partnership agreement (a major stumbling block for many in round one) has been posted on the DERG website
  3. All successful round one applications have been posted on the website
  4. Applicants are given more time to prepare applications (up to 2 months)
  5. Two separate bidders conferences (in person, by telephone or over the web) will be offered in advance of the application due date to answer questions
  6. The State developed a consolidated application form to cover all types of projects (retrofits, repowers and replacements)
  7. A checklist will be included in the application packet to ensure applicants include all required information

Other Developments:  ODOD made a policy decision to set aside $5 million of the remaining $11.2 million in funding for public transit projects. However, if total transit requests are below $5 million, all other fleets can compete for these funds. There is no ceiling on project amounts, but the minimum amount that could be requested is $20,000 per project.
 

When To Look For The New Application:  The new RFP has not yet been posted on ODOD’s web page.  I imagine all the documents, including the RFP, checklist and other documents will be posted on the release date of the RFP (December 15th).  Keep an eye on ODOD’s website for this information.  In the meantime, it may be a good idea to evaluate projects and approach a public entity about a PPP contract

(Photo: Flickr terinea/everystockphoto.com)

A federal district court in Rhode Island has dismissed all the claims filed by the Auto companies seeking to strike down Rhode Island’s greenhouse gas regulations for new cars. The decision did not reach the merits of regulating greenhouse gases from automobiles.  The Federal Court ruled that the Auto companies were prevented from challenging the adoption of  the CARB like standards based upon prior federal court decisions.

The importance of the decision is that other states can now move forward with regulations adopting standards to control greenhouse gases from cars.  Auto companies had been challenging state efforts to establish regulations on the basis both the Energy Policy Act and Clean Air Act pre-empt state efforts to establish regulations.  This implication of this decision is that the Auto Companies can no longer challenge such regulations on that basis.

If you are interested in the legal background, here is a link to the decision.