Budget Bill (Am. Sub. House Bill 119)

1. E Check -- ORC §3704.14. This limits Ohio EPA’s use of E Check (automobile inspection and maintenance program) as one of the means to comply with federal Clean Air Act requirements. E Check can be extended on a year-to-year basis by the Governor’s executive order if necessary to comply with federal law but cannot include a tailpipe motor vehicle inspection program (onboard diagnostic inspections and gas-cap testing programs are acceptable). Limitations on regulation of mobile sources place a larger burden on the manufacturing industry in the total package for achieving attainment with the ozone standards.

2. Environmental Review Appeals Commission (ERAC) Appeals -- ORC §3745.04(B). This grants Ohio EPA the authority to modify, revise, renew or revoke any permit or final action while such action or permit is pending on appeal at ERAC. This potentially benefits manufacturers because permits can be modified even when an opposition group has appealed the permit to ERAC.

Ozone Issues

1. Ohio EPA Ozone Plan for Cleveland-Akron Area and Cincinnati Area. On June 15, 2007, Ohio EPA submitted to U.S. EPA draft plans to achieve attainment of the ozone standard for two areas in Ohio. Cleveland-Akron requirements include reasonably available control technology (“RACT”) for volatile organic compounds (“VOCs”) and nitrogen oxides (“NOX”), cleaner paints and architectural coatings, portable gas cans, reduced VOCs in consumer products and lower emissions from coal-burning power plants. Cincinnati requirements include all of the Cleveland-Akron requirements except RACT controls for VOCs and NOX. Public hearings on the draft plans were held on July 23, 2007 and July 24, 2007.

2. U.S. EPA Proposes New Ozone Standard . On July 11, 2007, U.S. EPA proposed a more stringent ozone standard, moving from a current level of 80 ppm to a range of 75 to 70 ppm. NAM estimates that “non attainment” areas will triple, from 391 areas now in ozone non-attainment to 1243 areas under the new standard, and will cost more than $100 billion in compliance costs to the industry. U.S. EPA is currently holding public hearings on the proposal, and public comments will be accepted until October 9, 2007. U.S. EPA plans to issue new rules in March 2008. Ohio currently cannot achieve attainment under the current ozone standard (see Cleveland-Akron and Cincinnati plans above), let alone meet a more stringent requirement.

3. Climate Registry . Ohio recently joined the Climate Registry, a national effort involving 41 states that will measure, track and publicly report greenhouse gas (GHG) emissions. On July 27, 2007, Ohio EPA issued a Draft Technical Framework document that explains the anticipated design and technical details of how the registry will function. Manufacturers will be requested in the future to participate in the registry. Though it currently appears that “participation” will be mandatory, details on this have not yet been decided.

Air Permitting Issues

1. Permit-to-Install and Operate (PTIO) Program -- OAC 3745-31 and -35. On July 3, 2007, Ohio EPA released revised draft rules to implement a combined air permit-to-install (PTI) and permit-to-operate (PTO) program, which was approved in concept by former Director Jones in February 2004. Rather than requiring a source to apply for a PTI, which is issued with both installation and operation terms, and then apply for a PTO within a year of construction, the new program will require one application for both a PTI and PTO and both installation and operation requirements will be issued under one document. OMA and other business trade groups submitted comments on the proposed rules on August 10, 2007 and on August 24, 2007.

2. Ohio EPA Air Permit Terms and Conditions

   As a result of comments made by OMA and other business trade groups, on June 19, 2007, Ohio EPA published online a compilation of common terms and conditions used by Ohio EPA’s Division of Air Pollution Control in preparing air permits.

3. U.S. EPA Proposed Flexible Air Permitting Rule

   On August 28, 2007, U.S. EPA proposed revisions that would make more broadly available a new approach to air permitting known as a “flexible air permit”. Under the program, a flexible air permit would explain its operational plans and possible changes to those plans for the duration of the permit term, typically five years.

   Proposed options under the program include the use of alternative operating scenarios (AOSs) and approved replicable methodologies (ARMs). An AOS enables a source to obtain approval to make changes to existing emissions units by including in the permit an explanation of how the facility would continue to assure compliance with the different Clean Air Act requirements. For example, an AOS for an existing boiler might allow the unit to switch from oil to coal (if it were previously capable of doing so) without a permit revision, even though the change would be subject to source to different Clean Air Act requirements.

   An ARM is a replicable protocol placed in a permit to facilitate compliance with an applicable requirement in situations that otherwise could require a permit revision. For example, an ARM could specify a replicable testing procedure for updating an emissions factor, rather than requiring a permit revision to accomplish its update. U.S. EPA's proposed rule has not yet been published in the Federal Register. Once it is published, the comment period will run for 60 days. This program has the potential to provide manufacturers with the ability to capture new market opportunities, to retain and attract jobs, and to compete more effectively in global markets.

Air Regulations

1. Nitrogen Oxides - Reasonable Available Control Technology (NOx RACT) Rules
   OAC 3745-110

   These rules will regulate nitrogen oxide emissions from existing stationary combustion sources (e.g., industrial boilers, combustion turbines) and will apply to existing sources in the eight “moderate” non-attainment counties (Cleveland/Akron area) and state-wide to new or modified sources. The rules were originally released to interested parties in July 2006. OMA and others submitted comments on the initial rule package. Based on some of these comments, the rule package was revised and again released for public comment. On June 8, 2007, a public hearing was held and the OMA and other business trade groups submitted additional comments.

2. Emission Reduction Credit Bank
   OAC Chap. 3745-111

   On June 25, 2007, Ohio EPA held a meeting on a preliminary version of new rules for emission offsets. While these preliminary rules have not yet been released for interested party comments, OMA and others were asked to provide comments on the draft package, which would establish an emission reduction credit (ERC) trade and banking program for the purpose of offsets. The purpose of the program is to create an official method for Ohio companies to register creditable ERC’s into an Ohio EPA “ERC Bank” for future internal use or to trade for the purpose of offsets. OMA and other business trade groups submitted comments on the draft package on July 9, 2007.

3. Draft Rules Updates

   The following draft rules have been covered in previous OMA Counsel Reports, but updated information is provided:

   1. NOX - Budget Trading Program (OAC Chap. 3745-14) - amended rules released for public comment, which were due on July 2, 2007.

   2. “Consumer Products” Rule (OAC Chap. 3745-112) - pulled from JCARR and refiled on July 3, 2007.

   3. “Architectural and Industrial Maintenance (AIM) Coatings” (OAC Chap. 3745-113) - pulled from JCARR and refiled on July 31, 1007.

   4. “Clean Air Interstate Rules (CAIR)” (OAC Chap. 3745-109) - pulled from JCARR and refiled on August 15, 2007.

   5. “Control of Emissions of Organic Materials from Stationary Sources” (OAC 3745-21-07) - pulled from JCARR and revised; public hearing and close of public comment period are set for October 3, 2007.

Water Regulations

401 Water Certification for Nationwide Permits . On July 6, 2007 Ohio EPA issued a Section 401 Water Quality Certification, in effect, re-authorizing the Army Corps of Engineers’ Nationwide Permit (NWP) program in Ohio; the NWP program allows for the filling and impacting of wetlands and streams under an expedited process.

Water Quality Standards
OAC Chap. 3745-1. On July 18, 2007, Ohio EPA issued draft revisions to the water quality standards for most of the major river basins in Ohio (e.g., Scioto River, Great Miami River, Chagrin River); public comments are due by August 31, 2007.

Wastewater Treatment Systems PTI -- OAC 3745-42-02. On August 17, 2007, Ohio EPA released draft amendments to the rules governing permits to install for water treatment/disposal systems; the amendments include a list of preconstruction/site preparation activities that may be conducted before obtaining a PTI; public comments are due by September 21, 2007.