Ohio Environmental Law Blog

Ohio EPA's Asbestos Rule Change Continues to Generate Controversy

Joe Koncelik — Fri, 11 May 2012 13:24:42 -0500

In two prior posts, I discussed the recent Ohio EPA rule change to its asbestos rules. As discussed previously, Ohio EPA added a single sentence to definition of "friable asbestos" appearing in Ohio Administrative Code Rule 3745-20-01. The sentence states:

Any category I or category II asbestos containing material that becomes damaged from either deterioration or attempts at removal or abatement resulting in small fragments the size of four square inches or less shall also be considered friable or RACM.

The change is being referred to as the "four square inch" rule.

Since the rule change was issued, many contractors and industry officials have commented that it represents a significant change that directly impacts abatement and demolition practices. Ohio EPA has maintained that all they were doing was providing greater clarity as to what the term "small fragments" refers to in the rule.

BECO Luncheon Highlights Controversy Regarding the Rule

This afternoon I attended the Building Environment Council of Ohio (BECO) luncheon where a panelist of three Ohio EPA staff were present to discuss and answer questions regarding the rule. A simple once sentence change resulted in more than two hours of discussion.

Why so much discussion? The dispute seems to boil down to whether non-friable asbestos category I material, such as vinyl floor tile or roofing material, must be removed prior to demolition of the structure.

Contractors in the audience told Ohio EPA that it was virtually impossible to demolish a large structure without breaking up Category I material into four square inches. They also asserted that if the demolition didn't break up the material, the clean up afterward would more than likely result in four squire inch pieces. Contractors noted that U.S. EPA guidance suggests Category I non-friable asbestos can remain during demolition.

Ohio EPA responded that they felt the rule change had nothing to do with the issue of removal prior to demolition. The Agency indicated all the rule does is define what constitutes "small fragments." The Agency personnel acknowledged the U.S. EPA guidance and said its still the rule that non-friable material can remain during demolition, but noted, even prior to this rule change- you run the risk material gets broken up into small fragments which we could consider a potential violation.

The Agency mentioned that in West Virginia and Tennessee the asbestos rules simply require removal of all Category I non-friable material prior to demo. Contractors in the audience asked the Agency why they didn't simply write the rule to require removal like those other states.

Ohio EPA responded that they wanted to preserve the option that building owner did not have to remove the Category I non-friable material prior to demolition. Staff said that "perhaps the owner is very confident demolition won't result in small fragments." It was noted by several in the audience that the lack of clear standard puts demolition contractors in a very tough spot.

The takeaway from the discussion- If you leave Category I asbestos material in place during demolition, you run the risk that from the point of demolition to disposal in a landfill it gets broken into small fragments which the Agency may consider a violation. The Agency said said one piece four inches in size wouldn't be a violation, there would have to be a "substantial" amount of such small fragments. What constitutes "substantial" would be decided on a case by case basis.

City Officials and Developers From Around the State Express Concerns Regarding Changes in Ohio's Brownfield Funding

Joe Koncelik — Wed, 02 May 2012 08:44:29 -0500

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

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

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

Middletown

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

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

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

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

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

Cleveland

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

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

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

Akron

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

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

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

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

Dayton

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

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

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

Toledo

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

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

Ohio EPA Wants to Take Over Wetland and Stream Permitting from the Army Corps of Engineers

Joe Koncelik — Fri, 27 Apr 2012 10:00:43 -0500

Another aspect of Governor Kasich's controversial proposed legislation- Senate Bill 315- is to provide the legislative authority for Ohio EPA to take over Section 404 Clean Water Act permitting from the Army Corps of Engineers. Section 404 permits are needed prior to impacts to streams or wetlands within federal jurisdiction.

The bill itself doesn't really do that much. It simply provides the authority to the Director of Ohio EPA to seek approval from U.S. EPA to assume responsibility for administering the Section 404 permitting program. The real important issues will be covered in the approval request itself.

As discussed below, the biggest issue Ohio EPA faces is to convince U.S. EPA in its request that it has sufficient resources to take over all the Section 404 permitting functions from the Army Corps.

What's good about the proposal

Right now any developer that needs to impact wetlands or streams as part of their development will typically need to obtain two permit approvals. First, they must obtain a Section 401 Water Quality Certification from Ohio EPA. Second, if the wetland or stream is considered within federal jurisdiction, the developer must obtain a Section 404 permit from the Army Corps of Engineers.

The fact two permits will be needed won't change if Ohio takes over the Section 404 program. However, developers will have the opportunity to go to one regulator to obtain both certifications. This will hopefully streamline the process.

Another major complication under the current structure is that Ohio is divided among four different Army Corp Districts- Pittsburgh, Buffalo, Louisville and Huntington. Each of the Districts has very different ways they process Section 404 permits. Therefore, another benefit of Ohio taking over the program would be greater consistency.

Approval Process Will Be Lengthy and Difficult

While there are good reasons for Ohio to take over Section 404 permitting, it will be a very lengthy and difficult process. First, Ohio EPA will have to show that it has sufficient resources to handle all the duties performed by the Army Corps. I have heard projections that this could take up to forty (40) additional staff in Ohio EPA wetland section.

This would be a very substantial increase in staff and the resources will be very difficult to come by. Unless, Ohio EPA is going to direct fees that are currently being used to support other programs, the Agency would need to seek a fee increase or new fee. While applicants may like the streamlined process, its unlikely they will want to pay substantially more for it.

If the Director was going to tap into current fees, such as the solid waste disposal fee, he will have to likely cut other programs. Also, the solid waste industry may object to use of the disposal fees to pay for significant new staff in program that doesn't directly deal with management of solid waste.

Even if Ohio EPA clears the hurdle of demonstrating sufficient resources, it will still need to prove to U.S. EPA its has the legal authority to carry out the same functions as the Army Corps. The last time the State of Ohio tried to convince U.S. EPA of something similar it was transfer of the water permitting program (NDPES) for large farms to the Department of Agriculture. This process has taken years and involves only a transfer between two state agencies.

While the idea may sound good in theory, Ohio faces a significant uphill climb to make this proposal a reality.

U.S. EPA Releases New Air Emission Standards for Fracking

Joe Koncelik — Thu, 19 Apr 2012 17:28:18 -0500

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

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

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

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

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

EPA Delay's More Expensive Controls to 2015

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

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

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

For more information:

Text of the NSPS Final Rule (588 pages)
EPA Fact Sheet regarding the rule
EPA summary of requirements for natural as well sites
EPA Summary of requirements relating to natural gas compressor stations
EPA Summary of requirement relating to natural gas processing plants
EPA Summary of requirements relating to natural gas gathering and boosting stations
EPA Summary of requirements for oil production equipment

Ohio EPA Loses in Court Over "Friable Asbestos" Triggering Rule Change

Joe Koncelik — Wed, 18 Apr 2012 12:34:49 -0500

In a prior post (Ohio EPA Asbestos Rule Changes Could Prove Costly), I discussed Ohio EPA rule change to the definition of friable asbestos. As discussed in the prior post, Ohio EPA added a single sentence to definition of "friable asbestos" appearing in Ohio Administrative Code Rule 3745-20-01. The sentence states:

Any category I or category II asbestos containing material that becomes damaged from either deterioration or attempts at removal or abatement resulting in small fragments the size of four square inches or less shall also be considered friable or RACM.

It appears that the Ohio EPA rule change was triggered by the fact is lost in Court over this very issue- whether small pieces of category I ACM were "friable asbestos" triggering NESHAP management regulations. Not only did Ohio EPA lose at the trial court level, it now has also lost on appeal.

A Battle of Experts

The appellate court decision was issued March 30th in State of Ohio v. Titan Wrecking & Environmental LLC. The case involved the removal of vinyl floor tile in a Cleveland School prior to demolition.

The issue was whether Titan's method of removal (use of a bobcat to pull up the tile) caused the tile to become "regulated asbestos containing material" (RACM) and subject to asbestos regulations (the NESHAP regulations). State experts asserted at trial that the vinyl floor tile was rendered friable and/or that it had been subject to grinding by Titan's removal activities and, as a result, Titan should have complied with the emission control and disposal procedures set forth in the Ohio Administrative Code.

Ohio EPA asserted that contractors cannot deliberately cause ACM tile to become friable by removal. That the tile should have been removed intact and remain that way all the way through disposal. The fact the tile was "broken into small pieces...some pieces smaller than a dime" meant it had become friable.

Titan's expert said U.S. EPA had removed the term "broken" in prior guidance. Current EPA guidance says the tile must be "crumbled, pulverized, or reduced to powder" to be considered friable, not just broken.

The Court said it weighed the evidence and the testimony of the experts and agreed with Titan's expert (Wayne Ingram- Testing Services International) The Court of Appeals refused to overturn the trial court's decision that broken vinyl floor tile was not enough evidence to conclude it had become friable.

After Losing in Court Ohio EPA Changes the Rule

As you can see from the description of the case, the issue really came down to whether broken pieces of floor tile triggered asbestos regulations. Since Ohio EPA lost based on expert witness testimony and a review of current EPA guidance, Ohio EPA decided to amend the rule to specifically add language incorporating their preferred interpretation.

As discussed in the prior post, the rule change could prove costly for contractors who typically preferred removing floor tile or other ACM prior to demolition.

President Issues Executive Order Creating Interagency Work Group on Fracking

Joe Koncelik — Tue, 17 Apr 2012 16:20:38 -0500

On April 13th, President Obama issued an Executive Order creating a federal inter-agency task to coordinate efforts on oversight of horizontal well drilling and hydraulic fracturing for natural gas. Method such as hydraulic fracturing (i.e. "fracking") have allowed access to massive new deposits of natural gas bring the price down for natural gas to historic lows. While fracking has resulted in a huge increase in production, the drilling method continue to generate environmental concerns.

Thus far, the States have really taken the lead in development of new regulations and requirements for fracking. In my last post I discussed Ohio's recent legislative proposal. Now, the federal government will attempt to coordinate its efforts regarding oversight and planning associated with unconventional natural gas drilling techniques such as fracking. The Executive Order creates the inter-agency work group for the following purposes:

Coordinate agency policy activities, ensuring their efficient and effective operation and facilitating cooperation among agencies, as appropriate;
coordinate among agencies the sharing of scientific, environmental, and related technical and economic information;
engage in long-term planning and ensure coordination among the appropriate Federal entities with respect to such issues as research, natural resource assessment, and the development of infrastructure;
promote interagency communication with stakeholders; and
consult with other agencies and offices as appropriate.

The Work Group is made up of 13 federal agencies and departments, including: U.S. EPA, U.S. Dept. of Transportation, Dept. of Interior, Dept. of Energy, and others.

It appears that industry supports the working group as a potential mechanism to avoid applicative regulation. This from the Washington Post:

“We have called on the White House to rein in these uncoordinated activities to avoid unnecessary and overlapping federal regulatory efforts and are pleased to see forward progress,” said Jack Gerard, president and CEO of the American Petroleum Institute, the largest lobbying group for the oil and gas industry.

Gerard and other industry leaders met with White House officials Friday.

Dave McCurdy, president and CEO of the American Gas Association, said the new working group will help promote consistency among administration policies.

In it is interesting that the Washington Post and other news outlets reported the purpose of the working group as to "coordinate new regulation." However, reading through the five stated purposes of the working group none of them even mention regulation. Rather, it appears as if the purpose of the group is to share information, not coordinate regulatory efforts.

In my experience working with such federal inter-agency workgroups associated with the Great Lakes, federal agencies were reluctant to give up their own turf. Unless the Administration takes an active role in working group it seems very unlikely the agencies, on their own, will coordinate their regulatory efforts..

Governor Releases Bill to Regulate Shale Gas Drilling and Wastewater Disposal

Joe Koncelik — Mon, 09 Apr 2012 15:39:53 -0500

Right now there is no other topic in Ohio that generates more news coverage than horizontal gas drilling (or "fracking"). It seems a day doesn't go by without a new news story regarding fracking or related developments.

Ohio has seen oil & gas wells installed for well over a hundred years. However, until recently huge deposits of natural gas in shale formations deep beneath the ground were not accessible. Now, using new technology (i.e. fracking) those deposits can be tapped. The implications for Ohio are certainly significant.

Along with the tremendous opportunity that access to the Utica Shale deposits present, come concerns regarding protecting the environment, including ground water resources. Many have said that Ohio's out dated oil & gas laws need to catch up with today's technology.

Senate Bill 315

In order to address these concerns, on March 22nd Governor Kasich released Ohio Senate Bill 315 (S.B. 315). While the bill is dubbed an energy bill and does touch on other subjects, its principal focus is new regulation of horizontal gas well drilling.

The bill also attempts to increase regulations on deep well injection as a means of disposal of massive amounts of fracking wastewater and/or brine. In the aftermath of the controversy as to whether disposal of fracking wastewater led to earthquake(s) in Northeast Ohio, the bill adds to the growing list of new regulations governing this method of disposal.

Major New Requirements in S.B. 315 Governing Horizontal Wells or "Fracking"

Creates a new oil & gas permit to be issued by the Ohio Department of Natural Resources (ODNR) for "horizontal wells:"
The new horizontal well permit application will require new information that the old oil & gas permit applications never addressed, including:
- A $15,000 permit fee;
- Road Use Maintenance Agreements- will require the applicant to provide a copy of an agreement with local government(s) concerning maintenance of roads, streets, and highways;
- Source Water Identification- must identify the ground water or surface water source for the production of the well. This is requirement applies to horizontal well permits because they use millions of gallons of water;
- Residential Well Sampling- must show the sample results of all water wells within 1,500 feet of the proposed well prior to commencement of drilling;
- Insurance Coverage- must obtain $5 million in coverage for injury to persons or property. Also, must include a "reasonable level" of coverage for any pollution or contamination that may occur as a result of the drilling, operation, or plugging of the owner's wells. (See discussion below regarding insurance)
- Disclosure of fluids used in wells- one area of controversy associated with fracking is the use of chemicals along with the water during the drilling and fracking process. Under the bill, the owner of the well will have to disclose all chemicals used and the amount used during service, operation, and plugging of the well. These compounds will be posted on ODNR's web page.
- Fresh Water Impoundments- ONDR is given rule making authority to regulate location and construction of fresh water impoundments used in fracking.

Major New Requirements Governing Deep Well Injection

S.B. 315 increases disposal fees and includes new regulations governing oil & gas injections wells, including:
- Doubles the fee for each barrel of substance generated locally that is disposed through deep well injection;
- Raises the fee by five times the amount (20 cents to $1 dollar) for out of state substances shipped in for disposal in Ohio deep wells. This is likely to address the concern Pennsylvania is shipping its wastewater associated with fracking to Ohio for disposal;
- Increases the information that must be submitted by a brine/wastewater transporter to be properly certified by the State; and
- Owner of deep well must obtain list from transporter of brine or wastewater generated through fracking a list of all chemical compounds.

Key Issue under S.B. 315: How Much Environmental Insurance will be Required?

The philosophy of the bill seems to be requiring data collection prior to commencing the fracking process. What data is being collected? The current levels of contamination, if any, in existing residential wells within 1,500 feet prior to horizontal drilling. Followed by disclosure of all the chemicals compounds used in the fracking process.

The hope is that the information (i.e. baseline record) could be used to determine if fracking contaminated groundwater or drinking water supplies. Simply compare the old well samples to new sample, post fracking, and see if any of the disclosed chemical compounds are detected.

Assume it is demonstrated that contamination did occur as a result of fracking. The bill requires a "reasonable level" of insurance coverage be provided for environmental contamination. The determination of "reasonable" will be key issue.

It is likely (and would make good business sense) if you were an oil & gas driller to use the corporate form to try and limit liability if something goes wrong. This means it is quite possible the only funds that may be available to address contamination will be insurance proceeds. Therefore, how much insurance coverage is required will be a key issue.

EPA Overhauls Underground Storage Tank Regulations for the First Time in Over Two Decades

Joe Koncelik — Thu, 05 Apr 2012 12:00:44 -0500

EPA is proposing a whole series of new inspection and testing requirements for underground storage tanks (USTs). By expanding the types of UST systems covered under the rules, EPA is proposing to extend application of all UST regulations to entities not previously regulated, such as hospitals and universities.

EPA first promulgated regulation governing underground storage tanks (USTs) in 1988 (40 CFR Part 280). This regulation set minimum standards for new tanks and required owners and operators of existing tanks to upgrade, replace, or close them. The regulations largely covered gasoline dispensing facilities (GDFs). Now EPA wants to extend these regulations to other UST systems, such as those used for emergency power generators.

EPA has not significantly changed the UST regulations since 1988. In November 2011, EPA released a proposed UST rule package that would amend the 1988 regulations for the first time in over two decades.

Basic Purpose of New UST Regulations

EPA states the purpose of the amendments to the UST regulations is to add additional protections to prevent contamination of ground water. The amendments add new requirements in the following areas:

new inspection requirements;
establish operator classifications and associated mandatory training;
establish new standards for when tanks must be replaced; and
extend application of the regulations to tanks not previously covered.

Costs Associated with the New Regulations

U.S. EPA performed a regulatory impact analysis for the new requirements for USTs. It asserts that the total cost for businesses to comply with the new requirements is $210 million. EPA asserts that these costs are offset by the avoided clean up costs associated with spills that the new requirements are projected to prevent.

In weighing compliance costs with spill prevention, EPA says there is a net benefit to businesses. Its hard to see that businesses will view these new requirements as an overall cost benefit. In addition, the regulations add a new layer of paperwork for every tank covered.

EPA estimates it will cost each facility approximately $900 per year to comply with the new requirements. However, that figure does not capture the costs that may be incurred by entities that will be covered by the UST regulations for the first time.

Details on the Proposed Changes to the 1988 UST Rules

Along with the rule package, EPA put together a chart explaining the changes to the 1988 rules. Some of the major changes worth noting are as follows:

Extends Regulations to New USTs- the proposed rule eliminates "deferrals" that had exempted certain tank systems from the UST rules. Systems that would be covered include: emergency power UST systems, airport hydrant fuel distribution systems, field-constructed tanks, and certain waste-water treatment tanks systems.
National Inventory of USTs- All owners of USTs covered by the rule are required to submit a one-time notification of how many USTs they have, where they are located, when they were installed, and other identifying and compliance information.
Creates Operator Classifications and Mandatory Training- the new regulations create three classifications of operators (A, B and C). An individual must be designated for each of the three classes which cover employees with managerial, maintenance and day-to-day operational duties.. Each operator classification is required to be trained on minimum defined areas. Records must be maintained at each facility to show the operator training requirements have been satisfied;
New Tanks Must Have Secondary Containment and Under-Dispenser Containment (UDC)- all new and replaced UST systems must have secondary containment and UDC.
Spill and Overfill Inspections and Testing- Overfill equipment must be tested regularly. Spill prevention and release detection equipment must be tested regularly. Walk through inspections will be required to check on condition of equipment. The rules would phase out vapor monitoring and groundwater monitoring as release detection methods.
Replacement of UST Once Lining Fails- The 1988 UST regulations allowed lining as an upgrade option to extend the life of some tanks. Under amendment, once lining fails the UST must be taken out of service and replaced.
Testing After Repairs- Testing of the system is required after any repair to spill and overfill equipment and secondary containment. Even if the repair was due to general maintenance and not related to a release.
Standards for Tanks Holding Ethanol or Biodiesel- EPA is concerned certain chemicals are degrade tanks more quickly. Therefore, any tank holding greater than 10% ethanol or 20% biodiesel must demonstrate compatibility. The proposed regulations set forth standards for determining compatibility.
States Given Three Years to Adopt New Standards

Comment Period Extended

The original rule package was issued on November 18, 2011. EPA decided to extend the comment period until April 16, 2012.

Cheap Gas Fosters EPA Carbon Cap on Future Coal Plants

Joe Koncelik — Wed, 28 Mar 2012 15:47:22 -0500

On March 28th, U.S. EPA released its highly controversial rulemaking which establishes a carbon dioxide (CO2) emission limit on new coal-fired power plants. All future coal-fired power plants will have to utilize an unproven technology, carbon capture and sequestration (CCS), to meet the emission limits. CCS involves capturing CO2 and injecting it deep beneath the earth's surface for permanent storage.

EPA's proposed rule would exempt from the CO2 emission limit new coal plants that begin construction in the next twelve (12) months. Some analysts have commented that the fifteen coal-fired power plants currently slated for construction may be the last coal plants constructed in the United States. This from Businessweek:

“This is the tail end of coal generation build-out,” said Teri Viswanath, the director of commodity markets strategy at BNP Paribas SA (BNP) in New York. “The ones we are getting today -- that is going to be the last hurrah for coal-fired generation.”

Certainly that statement would appear to be true unless some of the current plants slated to utilize CCS can demonstrate its a workable technology. However, with the risk associated with CCS and the costs of new coal power plants, cheap natural gas does seem to be the fuel of choice for new electricity generation in the United States.

Basics of the EPA Rule

EPA's proposed Carbon Pollution Standard for New Power Plants would apply to all fossil-fuel-fired electric utility generating units (EGUs) that are larger than 25 megawatts. These new EGUs would have to meet an output-based standard of 1,000 pounds of CO2 per megawatt-hour (lb CO2/MWh gross).

Studies show that 95% of all newly constructed natural gas combined cycle power plant units meet the proposed standard without any add-on controls. New coal plants without CCS currently generate around 1,800 lbs CO2/MWh gross. Based on existing technology, the only way new coal plants could meet the 1,000 lbs standard would be through CCS.

Other key points:

Existing plants that begin construction in the next 12 months would be grandfathered (won't have to meet the standard);

Coal plants could be built without CCS if they add it later and the average CO2 emissions over a 30 year period equal the standard.; and

The rule does not cover existing coal-fired power plants

Cheap Natural Gas Behind EPA's Proposed Rule

In releasing the proposed rule, EPA provided a Regulatory Impact Analysis which projected that the rule would be very little negative effect on the cost of electricity or jobs due to low natural gas prices. The chart below shows EPA's analysis of future natural as prices even accounting for the increased use for electric generation.

EPA states in its analysis that market forces have already shifted toward construction of natural gas electricity generating units, in part, due to recent technology used to access deposits of natural gas in the Marcellus and Utica shale formations.

Under current and foreseeable future market conditions affecting new capacity
additions, gas-fired generating technologies can produce electricity at a lower levelized cost than coal-fired generating technologies, and therefore utilities are expected to rely heavily on combustion turbines and combined cycle plants using natural gas when they do need to expand capacity during the time horizon considered for this analysis. Current and projected natural gas prices are considerably lower than the prices observed over the past decade, largely due to advances in hydraulic fracturing and horizontal drilling techniques that have opened up new shale gas resources and substantially increased the supply of economically recoverable natural gas.

Because the large shale deposits have kept natural gas prices low, EPA finds no real impact from its proposed rule mandating CCS on new coal plants.

One has to ask the question of what happens if the dynamics on natural gas turn out differently. What if demand increases dramatically or anticipated capacity is much lower? Will EPA reconsider its carbon standard on new coal plants?

The rule presents somewhat of a risky proposition by relying on an unproven technology- CCS. So long as cheap natural gas remains, utilities will have very little incentive to really invest in CCS.

U.S. Supreme Court Unanimously Tells EPA its Orders Can be Reviewed

Joe Koncelik — Fri, 23 Mar 2012 13:34:38 -0500

On March 20, 2012, the U.S. Supreme Court handed down the much anticipated decision in Sackett v. EPA. The Court rejected U.S. EPA's claims that its administrative enforcement orders were not subject to pre-enforcement review. The Court's decision provides a new tool to challenge EPA administrative compliance orders.

Synopsis of the Case

The Clean Water Act prohibits filling of wetland without a permit. The Sacketts own a .63 acre parcel of land on which they hoped to construct a home. EPA said that the Sacketts had filled wetlands as part of their development without a permit.

EPA decided to take enforcement by issuing an administrative compliance order directing the Sacketts to remove the fill. If the Sacketts failed to comply with EPA's order they could potentially be liable for penalties of $37,500 for each day of non-compliance with the order and potentially an additional $37,500 per day for the underlying Clean Water Act violation.

The Sacketts attempted to appeal the administrative order in Court to challenge EPA's determination they filled regulated wetlands. EPA argued that the Sacketts were not entitled to any pre-enforcement review of the administrative order.

Lower Courts Ignore the Legal Presumption of a Right of Appeal

The Administrative Procedure Act ("APA") sets the standards for when administrative actions of federal agencies are subject to review or judicial appeal. The APA contains a presumption that federal statutes allow for judicial review of agency actions. That presumption can be overcome if: 1) there is an explicit bar to pre-enforcement review in the statue; or 2) the presumption "may be overcome by inferences of [congressional] intent drawn from the statutory scheme as a whole."

The Clean Water Act does not contain an explicit bar to pre-enforcement review (such a bar does exist under CERCLA- the federal Superfund law). Therefore, EPA had to argue the bar can be inferred from congressional intent.

Both the District Court and Appeals Court sided with EPA holding that a bar to review could be inferred from the congressional record and the language in the the Clean Water Act.

Supreme Court Unanimously Disagrees

Before determining whether there was a bar to appeal, the Court had to determine whether the administrative action amounted to a final order. The Court found that the order issued by EPA had all the hallmarks of a final order, including:

It determined the rights of the party- in this case, the Sacketts were required to restore the wetland;
Legal consequence flow from the order- the Sacketts were subject to penalties if they failed to comply;
The order is final- EPA did not provide the Sacketts a meaningful opportunity to challenge the order

After finding the order was final, the Court then rejected the lower courts finding that the history and language of the Clean Water Act suggested there should be no pre-enforcement review of orders. The Court held:

"APA's presumption of judicial review is a repudiation of the principle that efficiency of regulation conquers all." and

There is "no reason to think that the [Clean Water Act] was uniquely designed to enable the strong-arming of regulated parties into 'voluntary compliance' without the opportunity for judicial review- even judicial review of the question whether the regulated party is within the EPA's jurisdiction."

It is interesting that both lower courts sided with EPA, but yet the Supreme Court unanimously sided with the Sacketts. Its difficult to understand how such a split could occur.

Implications

Clearly, the Courts ruling gives attorneys representing regulated parties who are the subject of an EPA unilateral compliance order a tool to challenge the merits of those orders. Certainly, allowing such a review is a clear victory and certainly seems to comport with logic. The right to challenge EPA orders also likely extends to other environmental statutes that do not contain an explicit bar to pre-enforcement review, including orders issued related to hazardous waste (RCRA) and the Clean Air Act.

However, the standard for overturning an EPA order is very difficult to meet. In addition, the Supreme Court's decision is unclear as to whether penalties continue to amass while litigation proceeds.

Under the APA, an EPA action is entitled to deference and can only be overturned if it is demonstrated that the EPA acted in an "arbitrary and capricious" manner or "otherwise in violation of the law." That is a pretty tough hurdle to clear.

Also, the Court didn't address whether EPA could be entitled to penalties for non-compliance during the appeal let alone whether EPA could be entitled to double penalties- one set of penalties for failing to comply with the EPA's order at $37,500 per day and a second for violating the Clean Water Act (also at $37,500 per day). Therefore, a party could be risking up to $70,000 per day to continue its challenge of the EPA's action.

Until another court rules EPA is not entitled to collect such large penalties during the appeal, the deck is still pretty much stacked in EPA's favor or in the Court's words, EPA can still "strong arm" regulated parties.

Ohio EPA Asbestos Abatement Rule Changes Could be Costly

Joe Koncelik — Tue, 13 Mar 2012 15:08:00 -0500

Ohio EPA has finalized changes to its asbestos regulations which govern notification and work practices for asbestos abatement. Ohio EPA described the changes as minor. However, one change in particular could impact asbestos abatement contractors.

Ohio EPA modified the definition of "friable asbestos material" appearing in Ohio Administrative Code Section 3745-20-01. The only change was to add the following underlined language to the definition:

"Friable asbestos material" means any material containing more than one per cent asbestos by area, as determined using the method specified in 40 CFR Part 763, Subpart E, Appendix E, Section 1 Polarized Light Microscopy (PLM), that, when dry can be crumbled, pulverized, or reduced to powder by hand pressure. If the asbestos content is less than ten percent as determined by a method other than point counting by Polarized Light Microscopy, verify the asbestos content by point counting using Polarized Light Microscopy. Any category I or category II asbestos containing material that becomes damaged from either deterioration or attempts at removal or abatement resulting in small fragments the size of four square inches or less shall also be considered friable or RACM.

According to papers Ohio EPA filed as part of the rulemaking process, this rule change is a simple clarification of the definition of RACM and friable Asbestos Containing Materials (ACM). Ohio EPA also asserts U.S. EPA has a similar interpretation.

However, this sentence does not appear in the federal rules found in 40 CFR 61.141. Therefore, it is easy to read this as an expansion of what constitutes "friable asbestos material." In addition, Ohio EPA statement doesn't exactly appear consistent with guidance provided by U.S. EPA on the subject:

Category I non-friable ACM must be inspected and tested for friability if it is in poor condition before demolition to determine whether or not it is subject to the Asbestos NESHAP. If the ACM is friable, it must be handled in accordance with the NESHAP. Asbestos-containing packings, gaskets, resilient floor coverings and asphalt roofing materials must be removed before demolition only if they are in poor condition and are friable.

Ohio EPA may say the four square inches referenced in the rule is an indication the material is in poor condition. The rule does not say where the line is drawn. What if only one piece is damaged with pieces less than four square inches? Does that mean ALL the floor tile must be remove prior to demolition?

In talking with asbestos abatement contractors, this rule change has the potential to significantly impact demolition and renovation projects. Under the new definition, ACM flooring tile and other projects may need to be removed by a licensed asbestos abatement contractor prior to demolition. Also, roofing project that involve ACM roofing materials may also have to be performed by a licensed asbestos abatement contractor.

If either ACM floor tile, roofing material or other materials are damaged during the removal process or demolition, the contractor and the owner of the building risk a possible citation for failing to remove friable asbestos material prior to demolition. OAC 3745-21-04(A)(1)(a)

It is also interesting to note that Ohio EPA indicated in the rule filing there will be no impact on revenues or expenditures due to increased compliance costs.

It is my understanding that Ohio EPA will be performing in-house training of its inspectors to ensure consistency in applying the rule change. However, it may have been more prudent to provide greater clarity in the rule itself.

Legislation Introduced to Implement Great Lakes Compact following Governor Kasich Veto

Joe Koncelik — Mon, 12 Mar 2012 16:01:50 -0500

Representative Wachtmann has introduced H.B 473 which will implement Ohio's regulatory program under the Great Lakes Compact. H.B. 473 follows last summer's veto by Governor Kasich of H.B. 231 which was criticized by environmental groups and former Governor Taft and Senator Voinovich as not protective enough of Lake Erie.

The Great Lakes Compact was passed by the Great Lake states as well as Congress. The Compact sets regional standards governing water withdrawals and diversions from the Great Lakes. With 20% of the worlds fresh water, the Great Lake states viewed the Compact as critical to protecting their fresh water resource as pressure mounts to divert water to other regions or countries facing dwindling supplies of fresh water.

H.B. 473 certainly marks a significant departure from H.B. 231 on several important points. The most notable changes relate to the trigger levels for needing a permit and the standard for determining when a withdrawal could have an adverse impact.

Trigger Levels for Permitting

The main criticism of H.B. 231 was that it contained permit trigger thresholds which were higher than most of the other Great Lakes States which have already passed legislation implementing the Great Lakes Compact..

**Trigger Thresholds for Water Withdrawal Permit**

**(millions gallons per day - MGD)**
Triggers	H.B. 231	H.B 473
From Lake Erie	5 MGD averaged over 90 days	2.5 MGD
From Streams that flow into Lake Erie or groundwater	2 MGD averaged over 90 days	1 MGD
From High Quality Streams	300,000 gpd averaged over 90 days	100,000 gpd

H.B. 473 significantly ratchets down the trigger thresholds for needing a water withdrawal permit. Under the bill, Ohio would have lower thresholds than Indiana and comparable to Michigan's. It will still have higher thresholds than Pennsylvania or New York.

However, all other states allow averaging over at least 30 day period. The current version of H.B. 473 does not allow averaging. This is likely to be an area of debate moving forward.

The Compact itself allows averaging. It seems unreasonable to trigger a permit if on one day a pump installed has the capacity to withdrawal 100,000 gpd from a high quality stream regardless of whether that capacity is actually going to be utilized. This is particularly the case when the permit program exams impacts to Lake Erie and not the stream itself.

Definition of "Adverse Impact"

The State must deny a permit if the water withdrawal is determined to cause an "adverse impact" on Lake Erie. H.B. 473 eliminated the controversial definition of "adverse impact" that appeared in H.B. 231.

H.B. 231 defined adverse impacts in the negative- anything at or below 90 mgd from the Lake or 45 mgd from groundwater was presumed not to cause an impact. H.B. 473 leaves the definition up to future rulemaking by the Ohio Department of Natural Resources (ODNR). The bill calls for a study commission which will make recommendations on a definition to the Legislature.

Overall, H.B. 473 provides broader rulemaking authority to the ODNR. This marks a significant departure from H.B. 231 which provided virtually no rulemaking authority. H.B. 231 was meant to provide clarity by setting forth all the important provisions in statute leaving very little to future rulemaking.

H.B. 473 should be less controversial than H.B. 231 which was vetoed by Governor Kasich after virtually every major in Ohio paper issued editorials opposing the bill. While certain provisions will be debated, H.B. 473 moves Ohio much closer to the other Great Lakes States in how it regulates future water withdrawals from the Great Lakes Basin.

EPA Decides Not to Ratchet Down Federal Permitting Thresholds for Greenhouse Gases

Joe Koncelik — Mon, 12 Mar 2012 09:25:09 -0500

On February 24th, U.S. EPA announced that it would keep in tact the greenhouse gas (GHGs) thresholds for when federal permitting requirements would be triggered. In announcing that it would not ratchet down the trigger thresholds, EPA said state permitting authorities need more time to develop proper infrastructure as well as expertise in GHG permitting.

Under EPA's Tailoring Rule, EPA put in place much higher thresholds for when federal permitting would be triggered than appear in the Clean Air Act. The Act says any source with emissions of a regulated pollutant of 100/250 tons per year (tpy) should obtain a federal permit. This threshold would apply to GHGs but for the Tailoring Rule.

EPA said that applying 100/250 tpy triggers would result in hundreds of thousands of federal permits. Therefore, to avoid these "absurd results" EPA relaxed the standard through the Tailoring Rule. Step 1 of the Tailoring Rule applied to sources that trigger federal permitting anyway. Step 2 instituted a 100,000 tpy threshold for GHGs emitting from new sources and existing sources and any increase of 75,000 tpy of GHGs from existing sources would trigger permitting.

In Step 3 of the Tailoring Rule EPA was to examine the progress the states made in implementing the new trigger thresholds for GHGs. EPA said it would consider whether to lower the threshold to 50,000 tpy.

EPA's Step 3 Keeps 100,000 TPY and 75,000 TPY Triggers in Place

Under EPA's proposed Step 3 rule, new facilities with GHGs emissions of 100,000 tons per year (tpy) of carbon dioxide equivalent (CO2e) will be required to obtain a federal air permit (known as a "PSD permit"). Existing facilities that emit 100,000 tpy of CO2e and make changes that increase the GHG emission by at least 75,000 tpy CO2e will also trigger a PSD permit. Facilities that must obtain a PSD permit anyway in order to include other regulated pollutants, must also address GHG emission increases of 75,000 tpy or more of CO2e. New and existing sources with GHG emissions above 100,000 tpy CO2e must also obtain operating permits.

The proposal is in the 45 day public comment period after it is published in the federal register. There will also be a public hearing on March 20, 2012.

EPA's Walks Tightrope in Administering the Tailoring Rue

In my last post, I discussed the current legal challenge to EPA's climate change regulations, including the Tailoring Rule. I pointed out that the challenge to the Tailoring Rule is the most likely to succeed because EPA claims it can re-write a statute (the Clean Air Act) through regulation.

In arguing it has the authority to change the trigger standards in the Clean Air Act through rulemaking, EPA points to the legal theory that applying the statutory thresholds (100/250 tpy) would result in absurd results- thousands of permits that would flood both EPA and the states.

The tightrope EPA is walking is that, even if it has the legal authority to support the Tailoring Rule, it must still eventually ratchet down the GHG triggers to 100/250 tpy. In an election year, it was highly unlikely EPA would have moved the thresholds down to 50,000 tpy of CO2e in Step 3 of the Tailoring Rule as EPA previously suggested it might do.

EPA made the right choice. However, EPA action comes at the same time when the Tailoring Rule is being challenged in federal court. The Court may be less likely to buy EPA's argument that it will get to the 100/250 thresholds eventually when it decided to keep in place the initial thresholds and not demonstrate progress toward reaching the statutory thresholds..

Court Hears Two Days of Oral Argument over the Future of Climate Change Regulation

Joe Koncelik — Thu, 08 Mar 2012 17:00:19 -0500

The future direction of climate change regulation in the United States will turn on the decision of the U.S. Court of Appeals for the District Court of Columbia (D.C. Circuit) following two days of oral argument. A decision is expected as soon as this June.. There is no doubt that this may be the most significant environmental decision since the Supreme Court's ruling in Massachusetts v. EPA in which the Court determined CO2 and other greenhouse gases (GHGs) were a "pollutant" under the Clean Air Act.

EPA Climate Change Strategy

Following the Supreme Court's decision, EPA launched a major regulatory effort pertaining to control and reduction of greenhouse gases. Those regulations include:

Endangerment Finding- EPA's determination that GHGs are a threat to public health and welfare and, therefore, should be regulated under the Clean Air Act
Tailpipe Rule- establishes GHG emission standards for light-duty vehicles
Application of GHG to federal permitting requirements- inclusion of GHGs as a pollutant to be considered in federal permitting such as New Source Review (NSR)
"Tailoring Rule"- EPA's attempt to reduce the number of sources covered under the federal permitting requirements for GHGs by raising the trigger thresholds

All of the industry challenges to U.S. EPA's major rulemaking efforts were consolidated into a single appeal- Coalition for Responsible Regulation Inc. v. EPA. The coalition includes oil & gas, manufacturing, construction, chemical industry, other industry and select states.

The two most significant challenges relate to the Endangerment Finding and EPA's Tailoring Rule.

Argument Involving the Endangerment Finding

In order for EPA to regulate GHGs through tailpipe emission standards, the Agency first had to make the determination that GHGs threaten public health and welfare. (i.e. the "Endangerment Finding"). The Coalition challenged EPA finding which goes to the core of whether EPA should be regulating GHGs under the Clean Air Act.

Comments from the Judges during the argument would suggest that industry has an uphill battle in successfully challenging EPA's decision.

The attorney representing the Chamber argued that EPA should have considered the fact that people will simply adapt by migrating to cooler climates. He argued that if people migrate there may be no danger to public health.

Judge Tatel responded "How can the they [EPA] predict that migration patterns would be sufficient to overcome danger." He also suggested that under the theory offered, EPA shouldn't regulate pollutants as a carcinogen because some day there may be a cure for cancer.

It seems unlikely the Court is going to second guess the Agency's evaluation of the science behind the endangerment finding.

Arguments over Tailoring Rule

If the challenge to the Endangerment finding goes at the science behind EPA's regulations, the challenge to EPA's tailoring rule goes to how the Agency proposes to implement its regulations. As discussed on this blog before, while the challenge to EPA Tailoring Rule may be strong, it is a high-stakes gamble due to the uncertainty if the Coalition wins.

The argument is strong because the Clean Air Act itself contains the trigger for when a emissions of a pollutant are high enough to fall under federal air permitting regulations such as NSR. The standard is 250 tons per year.

If 250 tons per year were to be applied to GHGs, thousands of sources would be regulated. Even office buildings could require a federal air permit due to their energy use.

EPA recognizing the "absurd" results of using the 250 ton per year threshold for GHGs, tailored the trigger level through rulemaking. EPA said it will only initially regulate sources that emit between 75,000 to 100,000 tons per year of GHGs. EPA said overtime it would slowly ratchet down the trigger level through rulemaking until it is in sync with the 250 tons per year standard appearing in the Clean Air Act.

The Coalition lawyers argued that EPA's attempt to re-write the Clean Air Act was clear evidence the Act was not suited to regulate GHGs. The Coalition argued the EPA re-write was illegal and should be thrown out.

Judge Sentelle said in response " The harm you allege is regulatory burden. The remedy you seek is a heavier regulatory burden. That doesn't even make good nonsense."

High Stakes Gamble

The Coalition may be on the right side of the law when it says EPA does not have the power to rewrite the Clean Air Act. However, they are gambling that this will force Congress to Act to address the Supreme Court's decision in Massachusetts v. EPA. The Coalition wants Congress to remove GHGs as a pollutant under the Clean Air Act.

With gridlock in Washington it just seems very unlikely that this will happen. What could be left if the challenge to EPA's Tailoring Rule is successful, is a 250 ton per year standard that applies to GHGs. This is something even the EPA was desperately trying to avoid.

Part 1 on U.S. EPA's Audit Policy: The:Basics

Joe Koncelik — Mon, 05 Mar 2012 09:42:29 -0500

U.S. EPA's Environmental Audit Policy encourages companies to self-evaluate their compliance with environmental requirements and disclose any violations to EPA. As an incentive to disclose violations to EPA, the Audit Policy provides up to 100% forgiveness of gravity-based civil penalties if certain conditions are met.

U.S. EPA's audit policy contains nine (9) conditions that must be met in order to qualify for the penalty reduction incentive for self-disclosure. Those nine conditions include:

1. Systematic Discovery- There are two ways to qualify under this condition – perform an environmental audit or utilize a compliance management system to review compliance. If a company fails to meet this condition, EPA's policy still may provide a 75% reduction in gravity-based civil penalties if the other eight conditions are satisfied.
2. Voluntary Discovery- The violations disclosed must not have been otherwise legally required to be disclosed. (Example: Title V Air Permits require covered facilities to certify compliance on an annual basis with all requirements in the Title V air permit. Therefore, a Title V facility would not qualify for the incentives under the EPA Audit Policy if it disclosed non-compliance with permitting requirements with its Title V permit. Note: EPA does have a limited exception for new owners of Title V facilities.)
3. Prompt Disclosure- If you decide to disclose violations uncovered to try and secure gravity-based penalty reductions, the company must disclose all violations within 21 days of discovery
4. Independent Discovery and Disclosure- The audit cannot have been performed and/or the violation cannot have been discovered after a federal, state or local investigation, etc.
5. Correction and Remediation- The violations must have been corrected within 60 days.
6. Prevent Recurrence- The company must take steps to prevent recurrence of the violations.
7. No Repeat Violations- The same violations must not have occurred within 3 years at the same facility or within 5 years if EPA determines there is corporate pattern of violations.
8. Certain Violations Excluded- The two types of violations are excluded from any penalty forgiveness– violations that have the potential to cause serious harm or if the company violates an order or agreement with EPA.
9. Cooperation- The company must provide requisite or requested information to EPA.

Why Consider Using EPA's Audit Policy?

If s company can successfully establish all the conditions under EPA's audit policy for forgiveness of gravity-based civil penalties, the company may be able to avoid very large civil penalties that otherwise would have been paid if an EPA inspector detected the violations first.

One common area of environmental compliance that companies audit is Emergency Planning and Community Right to Know Act (EPCRA) reporting requirements. As a prime example of the benefits that may flow from using the U.S. EPA's Audit Policy:

This February U.S. EPA entered into a settlement with a New Cingular Wireless PCS LLC. The company found violations at 642 sites in 35 different states through two separate environmental audits. According to the settlement, the company avoided $6.7 million in projected gravity based civil penalties that EPA otherwise may have pursued if the violations were discovered through EPA inspections versus an audit.

While there are strong incentives to utilize EPA's audit policy, there are many issues to navigate. Some of these issues will be the subject of future blog posts on this topic. Those issues include:

Confidentiality of the audit;
Establishing the nine conditions;
The requirement to report all violations within 21 days
Gravity-based penalties versus the potential for assessment of economic benefit penalties

March 30th Deadline for $10 Million in Diesel Grants

Joe Koncelik — Mon, 27 Feb 2012 16:53:13 -0500

Companies and public entities that own diesel vehicles have until March 30th to submit an application for grant funding to pay for engine repower, retrofit and/or installation of idle technology. Ohio EPA released its request for proposal to solicit applications for $10 million in grant funding in 2012 under its Diesel Emission Reduction Grant (DERG) program.

See Ohio EPA's Map- You must be in one of the highlighted counties or townships to qualify

The $10 million in funding was made available in the last state budget by accessing federal highway Congestion Mitigation and Air Quality (CMAQ) funding. Another $10 million will be available in 2013.

The State funding comes at a time when the federal diesel grant program- DERA- is likely to see reduced funding. These state and federal diesel grant programs are a great way to leverage voluntary emission reductions which takes pressure off businesses to reduce emissions with the tightening of federal air quality standards.

Projects that are eligible for funding include replacement, repower, retrofit, and/or installation of anti-idle technology, of diesel-power public fleets, and public-private partnership (PPP) fleets. PPP fleets means that a private company must partner with an eligible local government to do the project. However, it is possible for private companies to access the grant funding.

Ohio EPA will host two conference calls to answer questions about the DERG program on March 8 at 10:00am and March 14 at 1:00pm. These are not mandatory for grant applicants. They are optional for anyone who would like to hear questions being asked and answered. For more information regarding the conference calls click here.

Ohio EPA Reform Bill Introduced

Joe Koncelik — Mon, 20 Feb 2012 16:46:11 -0500

Last week Senator Schaffer introduced Senate Bill 294- dubbed the EPA reform bill. According to testimony from Senator Schaffer and OEPA Director Scott Nally, the two had been working on the legislation for months.

This bill is the probably the first since Ohio EPA creation that touches on so many different areas of EPA regulatory authority, including:

Infectious waste- eliminate duplicate regulation
Wetland mitigation- change the hierarchy of mitigation (see below)
Underground storage tank clean up at brownfields- streamlines brownfield clean up (see below)
Compliance assistance to small businesses- expands confidentiality for inquiries for assistance by small businesses
Construction & demolition debris fees- clarifies fees apply to asbestos containing material
Statute of limitations for environmental enforcement actions- applies statute of limitations to enforcement actions related to construction & demolition debris
Regulation of public water systems and public water system operators- establishes criminal penalties for falsification and vandalism related to public drinking water systems
Disposal of solid waste- bans disposal of certain aluminum production waste after issues with fires at Countywide landfill

While the bill is broad in scope, many of the changes are minor fixes to address out of date statutory language. The biggest changes fall into the following areas:

Wetland Mitigation-

Anytime a developer impacts wetlands, they must offset the impacts with mitigation. Under current law, the hierarchy of mitigation required the developer to, first, try and perform mitigation on-site by creating new wetlands. Then mitigate off-site, but in the same watershed. If on-site and off-site mitigation weren't possible, the final option was purchasing credits at a wetland mitigation bank owned and operated by a third party.

Years ago, Ohio EPA studied the effectiveness of on-site mitigation and found that most newly created wetland were failing. This prompted a lengthy discussion about the merits of using wetland banks versus developer driven mitigation projects.

S.B. 294 flips the hierarchy on its head. Now, the preferred option is purchasing credits at a mitigation bank. Such a change may allow for better success in terms of survival of man-made wetlands. Also, a preference towards banks should greatly accelerate the permitting process for developers who often get bogged down in trying to find mitigation sites.

S.B. 294 also provides Ohio EPA with the authority to start an in lieu fee program. Under such a program, a developer could simply write a check paying for mitigation credits versus finding a mitigation project or bank. Ohio EPA, ODNR or a private entity operating the in lieu fee program could then use the funds to start mitigation projects they select. This option assist developers when they can't find sufficient credits at an acceptable mitigation bank.

Underground Storage Tanks at Brownfields-

This has long been an issue highlighted on this blog. Under current Ohio law, any business or developer cleaning up a brownfield is forced to go through two separate clean up programs if their site has underground storage tanks regulated by the Bureau of Underground Storage Tank Regulation (BUSTR).

Under Ohio law, any areas of brownfield site with BUSTR tanks is ineligible for participation in the Voluntary Action Program (VAP) until it, first, clean up the BUSTR tanks in accordance with BUSTR regulations. Never mind that the VAP clean up standards and BUSTR were equivalent in their protection of human health and the environment.

What resulted is lengthy delays at brownfield sites while the volunteer addressed all BUSTR tank issues prior to proceeding with the VAP.

S.B. 294 will allow any person cleaning up a brownfield to use the VAP to address BUSTR tanks as long as two conditions are met:

The VAP clean up also addresses other hazardous substances or petroleum that is not BUSTR regulated; and
The fire marshal has not issued an enforcement order requiring BUSTR closure.

This is a great reform that is a long time coming. It should make brownfield as well as VAP clean ups at operating sites far less complicated.

Compliance Assistance for Small Businesses

Ohio EPA has the Office of Compliance Assistance and Pollution Prevention (OCAPP). OCAPP allows small business to call EPA staff and ask for assistance with permitting or compliance issues without fear of enforcement.

Under existing law, only inquiries regarding air permitting are confidential. S.B. 294 would make inquiries into other permitting programs confidential. This gives the business the comfort of knowing their noncompliance, by law, cannot be reported to other EPA divisions or offices.

OCAPP can be a great tool for small businesses to cost effectively untangle complex EPA regulations and file for permits. S.B. 294 will enhance OCAPP's capabilities.

Introduction Just Marks the Beginning of the Legislative Process

S.B. 294 will be very interesting to watch as it proceeds through the legislature. Will Senator Schaffer and Ohio EPA be able to prevent it from becoming a "Christmas Tree", where every group and legislator tries to include their concepts or ideas for reforms to EPA?

Time will tell.

Recent Court Case Limits Ohio EPA Enforcement Authority and Ability to Recover Costs

Joe Koncelik — Thu, 09 Feb 2012 18:35:55 -0500

A recent court case calls into question Ohio EPA's legal authority to recover certain costs related to investigation and clean up of contaminated sites. The case also raises questions about Ohio EPA's long standing practice to negotiate administrative settlements of enforcement actions.

On January 18, 2012, the First District Court of Appeals in Hamilton County issued a decision in DeWine v. Mass Realty. Due to the serious implications that may stem from this decision, it is certain the State will seek a appeal to the Ohio Supreme Court.

Recovery of "Response Costs"

Ohio EPA has long pursued recovery of costs it incurs in investigating, cleaning up and taking enforcement actions at sites that have soil and groundwater contamination. Ohio EPA tracks the time its personnel work on these properties and routinely recovers such costs through enforcement actions against the owners or operators of those sites. Ohio EPA relies on R.C. 3734.20 as the basis of its authority to recover such costs.

The Court in Mass Realty said that Ohio EPA had over reached its statutory authority under R.C. 3734.20 in terms of the types of costs it could recover. The Court said Ohio EPA's authority is limited to costs the Agency's incurs directly related to "investigation" or "corrective measure." The Court said that staff time and travel costs were simply "normal office overhead items" for which Ohio EPA does not have the legal authority to recover.

The Court's view of costs recoverable under R.C. 3734.20 is more limited than U.S. EPA's ability to recover response costs under CERCLA (Superfund).

Enforcement Authority

For decades, Ohio EPA has negotiated resolution of enforcement actions with companies using administrative order settlements. These orders are referred to as Consensual Director's Findings & Orders ("Consensual F&Os").

Use of agreed settlements is important to Ohio EPA because it lacks the authority to unilaterally impose civil penalties. By negotiating resolutions of enforcement actions, Ohio EPA could impose penalties without having to refer those cases to the Ohio Attorney General's Office.

In virtually all Consensual F&Os issued over the last decade, Ohio EPA routinely cited to R.C. 3745.01 as its legal authority for such actions. Ohio EPA has argued this statutory provision provides the Agency the ability to enter contracts. Ohio EPA says Consensual F&Os are contracts- a voluntary agreement to resolve violations between the Agency and companies or individuals.

The Court rejected Ohio EPA's claim. It said that R.C. 3745.01 did not provide the legal authority for such Orders. The Court said Consensual F&Os goes beyond the type of contracting authority granted the Agency by the Ohio Legislature.

Potential Impact of the Ruling on Ohio EPA's Enforcement Process

Ohio EPA stopped issuing enforcement reports in 2006. However, reviewing the charts from the last available report, highlights the significant issue that the Agency faces should Ohio EPA be found to lack the authority to impose penalties through Consensual F&Os.

If Ohio EPA is forced to refer every case to the Attorney General's Office that it wishes to impose a civil penalty could mean a 400% increase in the number of cases referred.

Ohio EPA Issues "Faster Air Permit" for Shale Gas Sites

Joe Koncelik — Thu, 02 Feb 2012 17:17:40 -0500

In anticipation of an influx of shale gas drilling operations coming to the State, Ohio EPA decided to try and get ahead of the curve by developing an expedited permit to cover air emissions from such operations.

On February 1st, Ohio EPA issued a final air pollution general permit to cover production operations at shale gas well sites. By issuing the general permit, Ohio EPA is providing a path for shale gas operators to received expedited regulatory approval necessary to cover air emissions. Without the general permit, operators must obtain an individual air permit which can take longer and may be less certain as to terms and conditions for operations.

Applicants that meet the criteria, terms and conditions of the permit can expect to receive approval within weeks of applying. An individual air permit can take six months to issue. The process is expedited because all the terms and conditions of the permit are established up-front instead of after the application is filled.

The only issue with general permits is that they are one-size fits all templates. Meaning, you must be sure that your specific operation can meet the terms and conditions cause they can't be changed or modified to meet your specific circumstances. Company's that cannot live with the general permit terms & conditions can still apply for an individual air permit.

The Agency received many comments from both industry and environmental groups/concerned citizens on the draft permit released in October. The Agency announced that it had modified the permit to address the following concerns:

restricts normal flare operation, increases total flare capacity and allows for emergency flaring to safely burn gas;
requires installation of newer spark ignition internal combustion engines if total horsepower is to exceed 1300;
removes a limit on the number of storage tanks and replaces it with a limit on the total volume of material stored in tanks;
increases allowable dehydrators from one to two; removes unpaved roadways as an emissions unit (it is covered under another existing general permit); and
removes the natural gas micro turbine emissions unit (it was determined to be exempt).

NPDES General Permit for Industrial Activities - Feds and States Head toward Numeric Limits in Storm Water NPDES Permits

Joe Koncelik — Fri, 27 Jan 2012 13:18:31 -0500

Traditionally, EPA has regulated storm water differently than point source discharges. Regulators recognized that it was easier to install new technology to reduce pollutant loading from a specific industrial process with a specific "end of pipe" discharge point. Storm water was much more unpredictable.

Therefore, U.S. EPA regulated storm water using general NPDES permits without specific numeric limits. Instead, the general permit would require the development of a storm water pollution prevention plan (SWPPP) which required companies to institute "best management practices" (BMPs) to reduce pollution from run-off. The effectiveness of BMPs were evaluated by monitoring pollutant levels in run-off. but permits did not contain specific numeric effluent limits that had to be met.

EPA recognized the difficulties in trying to establish a numeric effluent limit for storm water discharges due to the variables involved. For instance, due to the variability of the size and nature of storm events, the amount of pollutant leaving a site in run-off was difficult to evaluate.

In 2002, EPA issued guidance that stated numeric limits would only be used "rarely" in storm water NPDES permits. However, EPA believe technology has improved and has signaled a shift toward numeric limits for storm water control. In 2010, EPA issued a controversial revision to that guidance indicated numeric values may be appropriate. (See, "Guidance on Establishing TMDL Waste Load Allocations for Storm Water Discharges in NPDES Permits" EPA November 2010)

Benchmarks Versus Numeric Limits

The first step toward numeric limits is EPA's use of "benchmarks" in storm water permits. EPA makes clear that benchmarks are not effluent limits. This means an exceedence of the numeric value is not a violation. However, the exceedence is evidence that BMPs need to be improved to reduce pollutant loading.

In December 2011, Ohio EPA followed U.S. EPA lead and incorporated benchmarks into its final version of the new NPDES General Permit for Industrial Activity. This permit differs from the previous General NPDES Permit companies in two significant ways.

First, the permit contains industry specific requirements (which is why the permit is 141 pages long). Second, it uses benchmarks tied to specific industrial activity that will be used to determine the effectiveness of BMPs.

Ohio EPA's new General Permit became effective starting January 1, 2012. However, facilities will still be covered by their old general permits, as long as they are still effective. Existing facilities will begin the transition to the new permit upon notification from Ohio EPA.

Ohio EPA will send written instructions to existing covered facilities on how to continue their general permit coverage with the submittal of a “re-notification” of intent to be covered. The existing facility will have 90 days to submit the re-notification.

Benchmark Monitoring

The new permit is effective for five years. During the first four years of the permit, facilities to which the industry specific benchmarks apply, will monitor their compliance with the benchmarks.

In the first three years of the permit, monitoring and reporting is required for four out of the 12 quarters. In year number four, the data is averaged and compared to applicable benchmarks for that industrial activity. If facilities are still exceeding the benchmarks after four years, they will be forced to review their BMPs, storm water control plans and house keeping activities to further reduce pollutant loading.

How Far will Facilities Need to Go to Comply with Benchmarks?

The permit makes very clear that the benchmarks are not enforceable effluent limits. Therefore, an exceedence is not a violation which could subject the facility to an enforcement action. However, the expectation is the facility will continue to improve storm water controls if the benchmarks are not met.

The final permit does contain language that allows faculties to assert they have done all they feasibly can to reduce pollutants. The permits states that facilities can demonstrate that “no further pollutant reductions are technologically available and economically practicable and achievable in light of best industry practice to meet the control measures/best management practices (BMPs) in Part 2 of this Permit.”

The determination must be documented and retained with the (SWPPP, and provide notification of this determination to Ohio EPA at the due date for the next benchmark monitoring report. Of course, a company's determination as to what is economically practicable may not be the same as the Agency's.

(For more information on Ohio EPA's NPDES General Permit for Industrial Activity- click here)