Word out today that PADEP has to cut 120 jobs as a result of the recent budget. I'm told that the final word on which employees are being cut will come out on Friday. I feel for my friends within the Department, both management and staff. This cannot be an easy time for anyone.
The Notice of Proposed Rulemaking for the proposed regulations on Discharges of High Total Dissolved Solids (TDS) was published in the Pennsylvania Bulletin on November 7, 2009. The comment period on the proposed regulations runs through February 5, 2010, and PADEP has scheduled four public hearings to take place in December. If everything runs according to the Department's stated timetable, the new regulations would take effect on or before January 1, 2011.
I've written about the potential impact of the proposed regulations in prior posts on this blog. For the Marcellus Shale industry, the regulations impose new treatment requirements and restrictions on wastewater discharges. Given the amount of money being invested by the Marcellus Shale industry in developing natural gas wells in Pennsylvania, I assume that they are prepared, to paraphrase JFK, to pay any price and bear any burden to make what could be billions in revenue from wells drilled into the Marcellus Shale formation. For businesses outside the growing natural gas industry, i.e., traditional Pennsylvania manufacturing businesses, these new regulations will pose some significant business challenges.
The regulations pose challenges for new businesses looking to locate in Pennsylvania. Any "new" business, i.e., one that did not have a wastewater discharge as of April 2009, will need to comply with the 500 ppm TDS discharge limit, if its wastewater discharge would otherwise exceed 2,000 ppm of TDS. In all likelihood, that will mean modifying processes to stay below the applicable thresholds so as not to trigger the need for wastewater treatment. If that can't be done, then the business will need to identify a means of treating the discharge and pay the cost of that treatment.
For existing businesses looking to expand, the regulations will pose unique challenges. Hypothetically, let's assume you are operating a manufacturing plant in Pennsylvania that employs 300 people. The manufacturing process uses water for cleaning purposes and it currently is treated before being discharged into some surface water. Your current permit has no limit on TDS, or for purposes of the hypothetical, let's assume it allows you to discharge up to 3,000 ppm of TDS. If this regulation becomes law, that business will be allowed to continue operating in its present form and nothing will change. There will be no unilateral reduction in the TDS limit and no need for additional treatment. The moment the manufacturer decides to increase production, resulting in an "expanded" or "increased" discharge, these new regulations would kick in and the manufacturer would have to identify means to treat the TDS discharge to meet the 500 ppm limit. The problem is, as PADEP recognizes in the preamble to the proposed rulemaking, "currently no treatment exists for TDS, sulfates and chlorides, other than dilution." Although the Department and stakeholders are trolling the literature, it's very possible that there still will be very few options available for treating high TDS when these regulations become final. That is going to present existing Pennsylvania businesses with a dilemma. They can stay in Pennsylvania and operate at current levels without the need to identify or pay for new wastewater treatment on TDS. If they decide they need to expand, they'll have to weigh the costs and availability of any new wastewater treatment against other options, which will include shutting down and/or moving operations outside Pennsylvania.
The last thing I would expect Pennsylvania elected officials would want is to force businesses to leave or locate new facilities elsewhere. And don't think businesses won't leave. In today's business climate, where many Pennsylvania manufacturing facilities are owned by out-of-state or foreign corporations, any disincentives to staying or locating in Pennsylvania could be the deciding factor. Having been an environmental lawyer for over 20 years, I've seen too many good Pennsylvania companies disappear from the landscape. Some have gone south (North Carolina, Texas, Mexico), others have gone overseas (India, China), and others have gone bankrupt or just gone out of business (Bethlehem Steel). When I was Deputy Secretary at PADEP, our brownfield program grew out of the fact that virtually every Pennsylvania community was the home to some old factory that was vacant, abandoned or underutilized, and incentives were needed to put those sites back into productive use.
While I realize that high TDS is an issue in some places around Pennsylvania, it certainly is not an issue throughout the Commonwealth. The rulemaking preamble notes that the Department is considering the formation of a work group in the Monongahela River Watershed to focus on wastewater issues relating to the Mon. No doubt there will be some questioning why the Department needs to take a one-size-fits-all approach to high TDS discharges. Why couldn't it simply focus on high TDS from the Marcellus Shale operators? Why couldn't it focus just on the Mon and the West Branch of the Susquehanna? Maybe those issues will be raised in the public comments, or during the public hearings scheduled outside those watersheds.
The rulemaking creates great uncertainty for Pennsylvania businesses. It makes it difficult to do long range planning. On top of that, there would appear to be some wishful thinking on the Department's part that cost-effective, wastewater treatment technologies will become available before the regulation becomes effective. All Pennsylvania business that generate high TDS need to take this seriously and to plan accordingly. Those plans should start with preparing comments for submittal to the EQB and working with their industry groups to make sure the Department hears their concerns.
I spoke with Scott Dunkelberger at PADCED today to see if he still has funds available for assessments and remediation grants. Scott says that the General Assembly transferred approximately $5 million from Growing Greener 2 into the ISR Fund, so he's in good shape. The most recent budget zeroed out approximately $500,000 that had been annually appropriated for assessments under Act 4, but there is still plenty of state money available for environmental assessments and remediation at brownfield sites in Pennsylvania. Applicants for grants must work with their local economic development agencies or redevelopment authorities, since only loan money is available to private developers. One piece of good news is that Scott says there really is no backlog at this point for ISR funding. When the economy was cranking, there often was a 6 to 12 month wait to get ISR funding, because there was always more funding requested than there was funding available. With the slowdown in the economy, there's no backlog now, so anyone with a viable brownfield redevelopment project should get in line now.
As previously reported, the state operating budget for PADEP took a large hit in the budget recently signed into law by Governor Rendell. The corresponding reduction in Department personnel will undoubtedly have an impact on brownfield redevelopment activities in Pennsylvania. Fewer personnel at PADEP means fewer people to review and approve Act 2 plans, reports and environmental covenants. It also means fewer people to review and approve air, water, stormwater and waste permits needed by developers to put brownfield sites back into productive reuse. The result of a reduced budget could be unpredictable review times as program managers scramble to find the necessary resources to get the job done.
In addition to the cuts at PADEP, significant cuts were made at the Department of Community and Economic Development which has historically provided grants to economic development agencies for environmental assessments and remediations at brownfield sites in Pennsylvania. The budget for PADCED dropped dramatically from $567 million to $264 million in this budget cycle. Included among those cuts was a zeroing out for the Industrial Sites Environmental Assessment Fund (a loss of $493,000) and a zeroing out for the Keystone Innovation Zones (a loss of $543,000). Marketing budgets for attracting business have been slashed, as have other grant and loan programs used to attract new businesses to Pennsylvania. Community Revitalization, previously at $39.5 million, has been eliminated entirely, as has $18.75 million for Urban Development.
In looking over the list of line items in the new budget for PADCED, I did not see any line item for the Industrial Sites Reuse Program. The ISR program had typically been funded annually at the $5 million level and it had been used to provide assessment and remediation grants under Act 2. I'm not sure if that money has been put into some other fund or if it has been eliminated entirely. I have a call into the PADCED grants office to see if I can get some answers regarding the future of the ISR fund. If it is gone, that will be a real loss to the county redevelopment authorities that have successfully used those funds to reclaim brownfield sites across the Commonwealth. It will also be a great loss to the brownfield redevelopers who have partnered with those redevelopment authorities and brought life back to some blighted properties.
It's possible that redevelopment and economic development agencies will be able to tap into other state grant funds to use for brownfield assessments and cleanup. I'll be looking into that as well. Absent state money, federal brownfield dollars will have to fill those gaps, and we may all have to learn to live with the extra strings that are attached to those federal brownfield dollars.
The Ohio EPA recently announced a new program designed to provide lower cost environmental insurance to brownfield developers remediating sites in Ohio's voluntary brownfield program. The news release issued by Ohio EPA states that it has signed a memorandum of understanding with three insurance carriers (ACE Environmental Risk, American Insurance Company and Navigator's Specialty Insurance Company) relating to their offering discounted insurance to applicants taking their sites through the states Voluntary Action Program. The discounts are 10 percent off the typical cost of the premium. Environmental insurance policies can be expensive for brownfield remediation projects, so a discounted policy would provide an additional incentive. I know that PADEP had pursued discussions with insurance carriers about a similar pooling arrangement, but I don't think those discussions came to fruition. There is no information on PADEP's website about any similar insurance program fro Pennsylvania brownfield sites. Now that Ohio has rolled out its program, it would be a good time for PADEP to take a look to see if that program can be adapted to fit Pennsylvania's brownfield program. Maybe the three insurance carriers could be convinced to provide similar discounts to brownfield remediators in the Commonwealth.
PADEP's state operating budget is being cut by 26.7%, according to information I received today. What does that translate into in terms of reduced compliment at the Department? I'm told that it's estimated PADEP will lose 325 real people. How the Department will get its work done with those cuts on top of other cuts that have occurred over the last few years is going to be a topic of much conversation both inside and outside the Department. I'm told the Department may have to consider handing programs back to EPA. What's it going to mean for brownfield developers? Will brownfield developers feel any of those cuts? Undoubtedly they will. Fewer DEP staffers mean fewer people to review Act 2 plans and reports. It also means fewer people to review and approve permit applications necessary for development projects, i.e., air permits, water permits, NPDES stormwater construction permits. The Department may have to resort to something it has previously tried to avoid, namely, allowing plans and permits to be deemed approved because the Department hasn't met its statutory review deadlines. The Department is going to be entering uncharted waters with this new budget, and we'll all have to be watching closely to see how it is going to affect individual programs.
Dave Hess just wrote on his blog that the PA Senate earlier today confirmed the following individuals as members of the Environmental Hearing Board: Thomas W. Renwand, Michelle Coleman, Michael Krancer, and Richard Mather. I spoke with Dave a few minutes ago and he confirmed the information. The new appointments mean that Judge Krancer has been returned to the EHB, having previously stepped down as Chief Judge to run for the PA Supreme Court. Rick Mather is currently the Deputy Chief Counsel for PADEP in Harrisburg. He has a lifetime of experience within the Department and is an excellent addition to the Board. I have worked with Rick and he has good judgment and I expect a good judicial temperment. The fifth remaining member is Judge Bernie Labuskas, whose term had not expired. The new appointments also mean that Judge George Miller's tenure on the EHB has now ended. There isn't enough time to review Judge Miller's accomplishments or to properly thank him for being an outstanding jurist. He arrived on the EHB having left private practice in 1995, where Jim Seif and I worked with George where he was chair of our environmental practice group. We knew George would make an excellent Judge because of his skills and training as an environmental lawyer, his collegial attitude, and his general nature as what people used to refer to as being "a Philadelphia lawyer." Judge Miller was my mentor at my former firm and I used to enjoy popping down into his office for a chat when I was on the 16th floor of the Rachel Carson Building and he was down on the second floor. At my former firm, Judge Miller used to affectionately call me "Lad". At DEP, he used to enjoy calling me Mr. Deputy Secretary. In many ways, I wouldn't be where I am or who I am without the guidance I received from Judge Miller. He is everything someone who calls themselves an environmental lawyer should strive to be -- honest, hardworking, knowledgeable, experienced, collegial, good-natured, and respectful to all. To Judge Miller I fondly say, you can be proud of your accomplishments on the Environmental Hearing Board, which go beyond the decisions you've written and go directly to the respect you've earned from all those who practiced before you.
The Department has posted on its website some proposed changes to the regulations for the Land Recycling Program. They can be found on the home page for the Cleanup Standards Scientific Advisory Board.
The proposed regulatory changes are "for discussion purposes only." They have not been sent to the Environmental Quality Board.
The most significant items are as follows: (1) many of the statewide health standards for soil and groundwater will be revised to reflect changes to the methodologies used by US EPA in calculating MCLs; (2) the vapor intrusion guidance is incorporated by reference into the regulations; and (3) the Department will explicitly recognize that groundwater samples taken for characterization purposes can be used for purposes of demonstrating attainment.
In terms of revising the cleanup standards, in looking through the charts it is clear that some numbers will go up and some will go down. The one change that jumped out at me was the proposed new statewide health standard for MTBE in groundwater which will go from 20 ppb to 190 ppb for residential and 960 ppb for non-residential properties. At many brownfield sites where petroleum products are the contaminant of concern, MTBE can be the driver in delaying closure of the site. That is likely to change if and when the new standards are adopted.
With regard to statewide health standards that are proposed to be decreased, I was told by Troy Conrad, the Director of the Land Recycling Program, that the Department has no intention of reopening any Act 2 releases at sites that demonstrated attainment under the existing statewide health standards. Those releases are valid, having been obtained under the standards existing at the time the Act 2 Final Report was approved. Moreover, those releases recognize that the sites are safe and protective of human health and the environment, and PADEP is right to leave those releases alone. It would be a real nightmare for the Department and for brownfield redevelopers to have to revisit each and every site where a release was obtained from the onset of the Land Recycling Program almost 15 years ago.
Inasmuch as the cleanup standards will be changing, environmental consultants and brownfield redevelopers in Pennsylvania would be smart to look at the proposed changes to the Chapter 250 regulations that are now on the Department's website to see if those changes will have any effect on current and future brownfield remediation projects.
I've taken my first look through the draft UECA regulations that are now on PADEP's website. My biggest issue isn't with what's in the draft regulations but with what isn't in there.
After several years of advising clients regarding compliance with UECA and having submitted a number of them to PADEP for review and approval, I can say that the most significant concern for brownfield developers is the fact that the Model Covenant on PADEP's website imposes periodic reporting obligations on the property owner that run in perpetuity. So, for example, if the remediation involves capping some contaminated soil with asphalt or concrete, the environmental covenant will say that the cap has to be maintained and the property owner must report annually (i.e., forever) to the Department that it is continuing to maintain that engineering control. It wasn't that way prior to UECA. Before UECA, the property owner would put notice of the cap in its deed and that would be that.
Upon first reading UECA, one could have easily concluded that the drafters did not intend to impose perpetual reporting obligations in each and every environmental covenant. Information "required" to be included in environmental covenants is set forth in Section 6504(a) of UECA. Additional information that was supposed to be optional was set forth in Section 6504(b) of UECA. One of the optional requirements is Section 6504(b)(2) -- "requirements for periodic reporting describing compliance with the environmental covenant." Nonetheless, what appears to have been considered optional by the drafters of UECA has now become required, as a result of the use of the Model Covenant and through the actions of the Department staff responsible for reviewing and approving the environmental covenants.
I had hoped that the regulations would provide an avenue for the Department to interpret Section 6504(b)(2) in a way that would set forth criteria to use in determining instances in which periodic reporting was not required. Surely, perpetual monitoring isn't necessary for every institutional and engineering control. We got along just fine without it in the twelve years that brownfield developers were successfully remediating thousands of sites under Act 2 prior to UECA's passage. In addition to using the regulations to draw distinctions between sites that require periodic monitoring and sites that don't, the regulations could be used to set ground rules for the frequency of the periodic reporting. Some ECs approved by the Department require annual reporting while others allow reporting every three years. There is nothing in any of the UECA guidance (the fact sheets and model covenant) issued by the Department to date that explains how one determines the needed frequency for the reporting. It seems to me that the regulations might be an appropriate place to set those ground rules.
In my reading through the draft regulations, it is apparent that the Department has chosen not to use the regulations to clarify when the "optional" reporting obligation need not be imposed or the frequency of the reporting obligation in those instances when it is imposed. In speaking with Troy Conrad at PADEP, who will be responsible for moving the draft regulations to completion, he acknowledged that the draft regulations don't address the issue of periodic reporting. He suggested it may be better addressed with additional guidance to be provided in the Act 2 Technical Guidance Manual. I agree that is a possibility, but these are issues that need to be addressed in one form or another.
To the extent that the Department is using the regulations to interpret UECA, then it may be entirely appropriate to include provisions addressing the requirements for periodic monitoring in Section 6504(b). The Act 2 TGM is used as a supplement to the Act 2 regulations. It expands upon and provides additional guidance, but the Act 2 regulations address the major issues. The need or lack thereof for periodic monitoring is a major issue under UECA. I would hope that the Department would specifically solicit comments on the need for periodic monitoring and the frequency of that monitoring, when it formally releases the draft regulations as proposed regulations later this year. This is an issue of great concern to brownfield developers in Pennsylvania. I intend to bring up the issue at the next meeting of the UECA Stakeholders Group and I would encourage others to weigh in on this issue as well.
I realize that the link I provided in my last post for the draft UECA regulations is not working. I'm not sure why that is, but for anyone looking to get a copy of the draft UECA regulations, here is how you do it:
Go to PADEP's website www.depweb.state.pa.us
On the left side, click on Public Participation
Scroll down to DEP Advisory Committee Agendas, Minutes and handouts and click on that
Scroll down to the Cleanup Standards Scientific Advisory Board and click on that
Click on Upcoming and Past Meeting Information
Click on Proposed Draft regulations implementing UECA
Click on the Staples Easy Button on your desk, which says "That was easy"
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