,
Kevin P. Braig ,
Mary Ann Poirier 
and Michael A. Kerr, C.H.M.M., REP –
Managing Partner, MAK Solve, LLC
Environmental laws affect a company's business operations at nearly every level. Following the 2010 election, most pundits agree that change is in the air. In Ohio, will that change extend to environmental regulation? Will it have a positive impact on Ohio businesses? Our panel of attorneys, along with a local environmental consultant recently tackled these issues and, we hope, provides valuable insights into the new political climate, the current challenges in the regulatory system and what businesses could possibly expect in the near term.
Moderator: Let's start with Ohio and the dramatic change that we're all expecting as a result of the total control of the state legislature by Republicans and governor's office: What impact is that going to have on the Ohio businesses you represent?
Kevin Braig: I hope it will be favorable. I think the past few years have been very hard on business. I do a lot of work in enforcement and I know from personal experience of instances where jobs have been lost because of enforcement (areas) and this is terribly important that every single job be treated as a unique and important thing right now. I think you almost have to get down to a job by job focus because there is no single job that we can afford to lose right now. Businesses have gotten so much better at taking care of the environment and what they do to the planet over the past 30 years. I think it's important now in the 21st century that there's very much a rethinking of the relationship between government regulators and businesses. The context is really different. There's been 30 years of pollution prevention. Today, the people who are in the best position to actually prevent pollution are the businesses, not the government. Businesses have to engage with the regulators and the regulators have to take a more cooperative approach, rather than a zero-sum game in which we said, "Well, we're either going to protect the environment or we're going to protect the businesses and the jobs. We're forced to take the position we have to protect one or the other, we can't do both. But I think that business and government can do both." Clients that we represent are committed to doing both. And there just has to be more working together between government and businesses.
Moderator: Has Governor-elect Kasich been very clear about what he wants or expects to do with the Ohio EPA?
Kevin Braig: I think he was very clear with what he expects of the administrative process, and not confined to the EPA. I think he wants to streamline the permitting process so that new businesses have an easier time getting started in Ohio. It's very important, too, that we start new businesses that provide new jobs while we preserve the ones that we have. I think he was very clear that this is going to be a new approach. That it is going to — hopefully — be a more cooperative approach for everyone. It's a commitment to care about what the business does with the product. You don't treat everything like a landfill. You have to remember that the Environmental Protection Agency was born in the 1970s. There were major problems that the Agency was designed to address, landfills being one of them. I use the landfill because it's a good example. Landfill is a classic waste situation. The person who runs the landfill agreed to take what is classic waste, things that we have not been clever enough to recycle or find another use for and make money by handling it.
We should look very closely at that and we should make sure that when a person is getting money for handling waste that they abide by all the regulations. But the way the world has evolved and become an international marketplace and because businesses have gotten better at pollution prevention, we have fewer and fewer businesses that generate what is truly classic waste. And now we have the EPA actually regulating what are the raw material inputs into processes and people's products themselves – not waste by-products. It's the products themselves or even earlier in the manufacturing process, the raw material inputs. You still have to protect the environment. You still have to protect the public. But you have to look at it differently. Not every activity is a landfill. There's room to be practical and reasonable because at the end of the day, we all need these products to have the lives that we're used to living.
Michael Kerr: I attended one of the governor-elect's events a couple of weeks ago and I clearly heard change is coming. The last four years have created a loss of jobs and I think to myself, "OK, so we've lost 400,000 jobs and the associated businesses and manufacturing enterprises, that is the physical plants themselves, and to a degree that is evidenced by what you're seeing in the Cessation of Regulated Operations Division at Ohio EPA. They're working like crazy because all of these companies are going out of business and shutting down. So with this reduction in physical operations to regulate, why do we need such a large Ohio EPA?" Just as business enterprises do, is there opportunity to look at any inefficiencies, duplication of effort and for other opportunities to reduce the size of government?
In this particular case, the Ohio Environmental Protection Agency based upon a smaller regulated constituency. And in so doing, still provide the regulatory framework and oversight, but let's not have a couple hundred folks sitting around with less to do now, less of a customer base if you will, less manufacturers to oversee and inspect. But now they [OEPA] — as Kevin alluded to — they go and dig deeper and deeper and deeper — work for work's sake that is silly. Let's stick with what we're mandated to do here and that is providing a regulatory framework and ensuring a regulatory framework is enforced. But let's not go on fishing expeditions. Let's not waste taxpayers' dollars. I see major change coming within the leadership of Ohio EPA. I see Governor-elect Kasich making some very strategic changes, funding changes and the overall way the Ohio EPA is run and I can tell you the business community is looking forward to that. That goes back to 1993-94 and the Voinovich administration. We had a change in philosophy. Manufacturers are not the enemy. They are the customers of Ohio EPA. While they [are] the regulated entity and we all agree that the regulators have a job, but hey, businesses are the customers. Be more customer-friendly. Become more user-friendly. I believe we were somewhat successful under Gov. Voinovich's program, and for a couple of years we saw changes in the permitting process. It was expedited. There's been a significant drop-off in that. It has become a lengthy process again — is this job security on the part of the regulator? How many times do these permits get kicked back? While there are checks and balances along the way, it's still a lengthy process. Quite frankly I think they're digging too deeply in it, so I see change coming.
Moderator: Staying at the state level, with the changes in the Ohio House and Senate, were there any individuals that were defeated or elected that are going to be good or bad for this particular practice area?
Timothy Hoffman: I think it's more of a general change. What we've heard from clients is that they want two things when they're dealing with the environmental regulatory agency. First they want an answer. So the speed by which they get an answer to a question or a conflict resolved is important. The second thing they need is predictability. Getting those are two things has been tough recently for us when representing our clients. Our clients come to us as the experts and say, 'When I want to do X or expand my production line, what do I have to do? So we tell them, well, you need a permit for this or a permit for that. They then ask, what am I likely to have to do to get that permit?' That's the part, the predictability part, that we can't necessarily always tell them. In many cases its individual by individual that gets assessed and you can't really predict from one situation to the next, how EPA might come at them. With the changes in the political scene, I think virtually all of those that have been elected see that some predictability needs to be put in the system along with some encouragement. And I think that's all it is, encourage those regulators to speed things up and be more predictable in how they administer the program in place.
Michael Kerr: I want to add one thing to that as well. It's going to be interesting to see how the governor-elect leverages Mary Taylor, a Certified Public Account, a highly qualified; experienced number-crunching individual who has made tremendous inroads into setting the stage for government change. How will her experience and expertise be used across all divisions, or all agencies in Ohio, not just the OEPA. If the Governor-elect uses that experience, she will be able to look at the budget and see how are those monies being used. How is Ohio EPA funded? What changes can take place? It will be nice to see some change there, and that may come from having an experienced financial professional looking over people's shoulders.
Moderator: At the federal level, obviously there's no change in the administration at this point in time, but do you believe the changes the administration is seeing in Congress will cause the U.S. EPA to start acting differently?
Mary Ann Poirier: I would love to say yes. However, I'm skeptical at this point that they would change course, particularly on their priority matters and what other priority initiatives they plan to tackle. And I don't think anything that happened on election day is going to change their drive to regulate greenhouse gases under the Clean Air Act, not with what they perceive to be a mandate from the Supreme Court telling them to do so, and not without new alternative legislation in place. One thing that folks have been talking about for years is the hope that federal legislation would come into place that would regulate greenhouse gases directly; smart people on both sides of the political aisle agree that the current law — the Clean Air Act — just doesn't work for greenhouse gases. The statute is a beast for regulators. Carbon dioxide — the most plentiful greenhouse gas — is something that is everywhere, from every source, and one molecule (no matter where emitted) contributes to the climate change phenomenon around the globe. The Bush administration wanted new legislation but didn't get it. The Obama administration came in saying they thought climate change legislation was the correct course, and they didn't accomplish that with control over both houses. With the House now having changed hands again, I don't think you're going to get new legislation on an issue as controversial as climate change. Unfortunately the place we're going to be in for a while is dealing with federal regulation coming through under the Clean Air Act. I respect what Michael was saying, hoping that perhaps Ohio EPA could be trimmed down and become more efficient, but even though we have new folks in place at the Ohio level thanks to the election, they're still getting mandates from the feds. And they still have to implement those mandates, and it's just going to get more and more complicated and more and more layered. We need the Ohio regulatory workforce in place to handle that complexity, with as much efficiency as possible.
Moderator: Do you expect to see any particular changes because of the U.S. House leadership change?
Mary Ann Poirier: I think you're going to see less federal environmental legislation. For example, there have been proposals to amend TSCA, the Toxic Substance Control Act, which goes to regulating chemicals. One, during the summer, was a Waxman proposal. I think, now, you're not going to see agreement on that; it's too controversial. Basically, I don't believe — with the House having changed — that anything controversial is going to be passed. Any sort of new environmental legislation is by definition controversial. We've been regulating the environment very seriously since at least 1970 when the EPA came into existence. As time has gone on, we've handled the big pollution problems, so anything new tends to be going after miniscule emissions, tightening up standards, regulating the small sources. We're well past the point of where any tweak doesn't hurt a lot economically to the regulated community. So because of that hurt and the sting of additional legislation, any change in legislation is going to hurt significantly, unless you have both the Senate and the House being Republican and perhaps they get it through. But with the houses being different you just aren't going to get a lot.
Moderator: Given those answers, it causes me to wonder, OK so 2012 is not that far away. What should I think about if I'm a business owner relative to the candidates who are out there. Is there any clarity at all? There is no presidential candidate that I'm aware of who has said "I'm going to repeal the Clean Air Act."
Mary Ann Poirier: I don't think you're going to see somebody say that because there is so much that has been established under the Clean Air Act, that works. For example, you have regulation of criteria pollutants through the NAAQS program. You have well-orchestrated or at least decently functioning state air programs established, through federal approval, under the act. So I don't think anyone's going to come in and say, 'Hey, we want to dismantle this for all the pollution control we've established and achieved over the past 40 years.' But I do think you might have presidential candidates who are business savvy step forward and say, 'If we are serious about reducing global emissions or climate change, it won't work under current law and we need to be doing it with incentives, and on an international basis.' Perhaps you will have people saying that, but frankly you have had people saying that before. It's just getting that implemented in a way that makes sense and that both houses of Congress are behind, that the international community can get behind, follow suit on, as well.
Moderator: Leading me to the next question is the whole idea that the environment is a global issue. Is there any hope that there would be a global body that attacks this because there are so many global issues here?
Mary Ann Poirier: Th ere are global bodies already. I just think whether you could ever get them to actually reach consensus and get what you want is the question. Th e problem is having the U.S. rush out and regulate, while other countries who are huge emitters do nothing; the end result is that U.S. manufacturers suffer, and therefore the U.S. economy suffers.
Kevin Braig: I don't know if you really need more global administrative regulatory authorities out there because of the underlying economics and reality of what's going on on a global basis. Th e realities are going to bring back in the next 10 to 20 years some modifications and changes in the way things are done in the United States. I think what you need to do is you need to be able to tell the entrepreneurs and the people of the United States that if they are in a position to do that, they will respond. It's a large project. Th ere is an underlying reality there.
Moderator: Is it more likely that Indian and Chinese businesses will become more regulated or that U.S. environmental law will become less restrictive? As a business owner, that's what I'd want to know: will the playing field be level in some respect? Which one is or should happen faster or first?
Kevin Braig: I'm not sure it's the substance of being more restrictive or more lenient, but rather is it more cooperative or more confrontational? I'm not an expert on how China and India have structured their relationships between government and industry, but given the enormous numbers of people in both of those countries, those demographics force that to have a little bit more of a government and business in a partnership. And they are just at the starting point of that. They have just scratched the surface. And if I'm right about that and they have a cooperative approach rather than a confrontational or even an adversarial approach, then that's going to be a real advantage for them in the global marketplace. They will be getting the clean air and do better business-wise. Those two things can be directly related and there's no reason that the United States should suffer from that because we have a great head start. We started working with the environment in the 1970s. We've done so much pollution prevention that I think it's more a question of how are these two institutions going to get along on a macro-scale. Also, are you going to address problems today with the same scale that you did when you were cleaning up large Superfund landfills or discharges of raw sewage into a river, when you can just look at the data and see that the risks are not as great as they used to be. Th ere aren't as many big fish to fry. Th e fish are getting smaller. I don't think the answer is just to make the EPA smaller because you have to value every-single job, including theirs, but we all have to get together and remember that if all you have is a hammer, then every problem looks like a nail. We have a lot more than hammers to deal with the problems and the issues. If everyone just approaches it with realistic and rationale sense of the scale of what we're looking at and works together, I think we could have a very safe, very secure, environment and a thriving business community. Sometimes that means the agency listens to the business and does it the business way. Sometimes it will mean the business looks at the agency and does it the agency's way, but it's going to depend on the specific problems and the site and I don't think we're there yet.
Mary Ann Poirier: I do think where we do have room to really improve, as Michael said earlier, is just in being more efficient. I know of one company that would love to expand operations but, for over four years, they have been trying to work out a permit renewal where they have a limit in their permit that should never have been in the permit in the first place. And they're leery about expanding operations, which would create new jobs, because they cannot resolve this "past" issue. They've been dealing with the issue for four years. So I think the agencies that regulate the manufacturers ought to think beyond what they've done before (which may have been incorrect), and think about the real world of solutions and look a little more broadly. Th e businesses that are out there today are not renegades. They're not out to destroy the environment. They know that it's desirable for everybody to have clean air and living space, but they are in the business of being a business. There shouldn't be regulations and practices in place that drive business away, and I do think that we see some of that. I don't think it's intentional, but I do think the slowness of the process and what can appear to be arbitrariness on the regulators' part prevent businesses from locating here.
Michael Kerr: I just remember that during the Clinton administration we had a US EPA Program called the Common Sense Initiative and so for a couple of years under Carol Browner on the federal side of things, there were some common sense aspects injected into the regulatory framework. I vividly recall the former management practices, as mandated under the Resources Conservation and Recovery Act as that pertains to a wastewater sludge from the manufacture of printed circuit boards. Th is F006 sludge, generated from manufacturing circuit boards contained huge quantities of copper and other metals that could be reclaimed, however under specific components of RCRA it was characterized as a hazardous waste, yet as I mentioned, 40% of the sludge was amenable for recycling, reuse and reclamation. And what does RCRA stand for? Yes, Resource Conservation and Recovery! Yet we could not reclaim those metals under RCRA, and it was not until the Common Sense Initiative, that we looked at that and we changed the regulations. It was recognition of technological change, manufacturing efficiencies, which presented opportunities for "inefficiencies" in the statute to be changed. And it worked, but that's just one example and that hasn't happened in several years now. Today, possibly in 2012, with a new administration in Washington, D.C., we could see some more of that. But I think the Clean Water Act, the Clean Air Act and its amendments and the Resource Conservation and Recovery Act provide a good foundation, an overarching foundation, to protect the United States of America from pollutants. That's a macro sense. But when you get down to an interpretation of those statutes at a federal level; then you get the interpretation of the Feds [developed] Rule at the state level and as has been seen, one person's interpretation is totally different. So the legal community, in support of the manufacturer, has to figure out what was the intent. And that interpretation, even across Ohio, is what causes an uneven playing field as that relates to compliance, and that presents business today with a challenge.
We're doing a good job in the United States, but I think there are opportunities to embrace technological advancements, different types of chemistry, and we see daily as a result of pollution prevention initiatives, chemicals that are used in today's manufacturing processes are managed much better than they were say 10 years ago. We've been forced to do that by the rules that have come out of these statutes and, I think we're succeeding. Th e regulatory agencies need to understand that and be more amenable, if you will, to different ways of doings. Just because it said it in a rule in 1984, which was derived from a statute, doesn't mean that it's necessarily how it should be done in 2010. So there's tremendous opportunity.
Timothy Hoffman: Let me just add an example or two. One of the things that I run into all the time and with one client in particular who is getting out of a particular line of business at the end of the year is the feeling that "I'm doing everything right, and because I'm doing everything right, I'm no longer cost-competitive with those that aren't doing everything right. Because I'm so big and my profile is so high, I get a lot of scrutiny, so I can't afford to do anything even close to what some of my competitors are doing. Many of my competitors are doing things differently and don't appear to be under as much scrutiny so I'm going to be forced to get out of that line of work because the amount the regulation and the cost it's putting on me is forcing me out." Th e regulator that my client told that to said, "We are really sorry to see you do that because we liked how you do things." Th at client then said, 'Well you come to a site and suggest I need to do something and I disagree with you and my lawyer disagrees with you and my technical consultant disagrees with you, but just to move on, I do what you ask by applying for a permit or doing this or doing that. Once I agree to do it, I would expect that we're all on our merry ways and back to business as usual." But what I've been seeing and what some clients have been seeing is that six months later that client gets a notice of violation because they didn't have the permit that they were asked to get that they agreed to get just to get on with their business. Th e next thing you know they're sitting with the regulator and the regulator is saying you admitted you did wrong because you got that permit that you didn't have. So it's kind of a vicious circle where you have an enforcement action starting because you agreed to do something you aren't sure was legally required of you and now you've got to deal with that and the legal fees, the consultant fees, the potential fines, where you were just trying to appease the regulator and get on with your business. I think that's something that all of us at the table have been seeing. I think all of us would agree that none of our clients object to the level of regulation that any statute calls for or the regulations under it. It's usually how it's administered that I think we're hoping will change here with the recent political changes. Th at we'll see a little easier way to do business and then move on to the next piece of business rather than turning it into some big enforcement case that the client has to deal with later.
Moderator: With all of the businesses that have closed down in the past several years in Ohio — 400,000 jobs lost — will those remaining businesses face tougher scrutiny because there are fewer regulated parties left?
Michael Kerr: I would have to say yes. From my perspective, I am getting more calls now from a, quite frankly, broader and diverse client base now because of increased scrutiny. Manufacturers; small industries, mom and pop shops that are now being visited by Ohio EPA. I'm also seeing an uptick in oversight when for many reasons an unfortunate incident happens within a particular segment of industry, not necessarily manufacturing, and that industry sector suddenly become the focus of Oho EPA. So it's interesting, the manufacturing base is eroding as companies are going out of business. Other business are leaving the state because of the tax basis, and those that are left are facing increased scrutiny and when those enforcement actions are taken, it seems like they just take on a life of their own. They just grow and grow and grow. I'll give you a great example here. Unfortunately, a company that I'm working with had a piece of equipment that malfunctioned. A leak occurred and within about three hours they had it under control. Within 24 hours the Ohio EPA had already been on site, identified that this was not an issue, identified that this was an unintentional release. The directive, and policy from OEPA, was basically file the necessary paperwork and you're good to go. It wasn't until six months later that this company, which is in Sydney, Ohio, received a notice of violation from U.S. EPA Region 5, saying you may have filed your paperwork with Ohio EPA for that release, but you didn't file with U.S. EPA Region 5 and you need to remedy that. What we did was photocopy it and ship it to them. About two months later we got notice that, OK don't do that again. If you have a release you need to let us know as well. So we're like — OK fine. Unfortunately, they generated hazardous waste as a result of this release and I informed them that you need to file next year a hazardous waste generator report. It's a one-shot deal, but you have to do it. Unfortunately, because of the economy, the person responsible for filing that report was terminated through a reduction in force. The president of the company knows that he had a release, but he doesn't know the reporting requirements and so now, just last week, we got a letter from Ohio EPA, a Notice of Violation. In that kind of scenario what would be really cool, is a courtesy call from Ohio EPA. Because it's a technicality. It's a paperwork violation, if you will — the environment was not in peril, human health was not at risk! A simple call: "Hey, are you going to send that in or what was the reason behind it?" Simple. Instead of having all the people involved in the process of generating that document. Place a call. Be more user-friendly. Be more open to what potentially is going on in that organization. This antagonistic relationship where you receive an official notice of violation in those types of situations, I don't think is appropriate and we're seeing a lot more of it.
Kevin Braig: I would definitely agree with that. The regulation is moving down to smaller businesses that aren't experienced in dealing with it because they went into business under a certain set of expectations on how they would be regulated and now the rules have changed. And they don't have the resources that the larger companies have to deal with this. We're also are seeing these things crop up not in any way prompted by the complaint of a regular citizen. If somebody is a neighbor and they're complaining to Ohio EPA about smells or discharges to the water, that's a very serious situation and all these people take it seriously. Too often now, we're seeing the regulators manufacturing enforcement. I recently handled a case where a compost facility up in northern Ohio took in animal waste and they composted it into reusable material that was put into bags and used as fertilizer. The composting company went out of business and that material had to go somewhere else. The Ohio EPA came in after the fact and my client ended up taking the compost. I'm seeing emails from the Ohio EPA that literally say, "I understand that the material is now going to Company B. Let's go up there and see what they're going to do." So instead of the regulator saying let's take a look around, see how this site can be handled, it spun out into an enforcement action. This has been going on for five years and in the entire time that I've been involved, there has never been a single complaint from any resident in that area about a smell, about a thing with the water, about any annoyance at that facility. They've (the community) lost a lot of jobs. Of course the economy doesn't help with that, but that is, I think, a classic example of where there was a great opportunity for the government and the business to work together. They could both work to make sure the site had all its paperwork in order and that material wasn't just dumped into a landfill and take up valuable landfill space, but rather put back into the stream of commerce and used productively. They threw that opportunity away.
Moderator: Since the courtesy phone calls about technical violations aren't happening, and the notice of violation arrives in the mail, what should someone do when that happens?
Michael Kerr: So the letter arrives in the mail and you look at it and you're surprised. What have I done wrong? My recommendation is to look at it from two perspectives. Initially look at who signed the letter. There are two modes of addressing this. First, identify who authored the letter, is it an environmental scientist or an environmental engineer within Ohio EPA that's generated that Notice of Violation, then go ahead and call an environmental consultant to support you in responding to it. However, if it's signed by someone who has "Esq." after their name, I strongly recommend you contact your in-house counsel or any of these folks about the table here. But look at the letter to make a determination of what it is. Is there any foundation to it? Second, what I suggest to clients is that you immediately turn around, draft a letter to Ohio EPA and say this is a formal notification that we have received your letter. Nothing ticks the Ohio EPA off more than sending these things out and you, not even as a common courtesy, respond to the effect that [we] are in receipt of it, and we'll get back with you. Now when you get back with them, there may be a time line placed on that, but when you get back with them be prepared to respond or ask for more time. The important thing is to start the process of communication with them. Because if they think that you haven't received it or you are being somewhat indifferent to that issuance of notice of violation, that just escalates their frustration with you and that can be detrimental to future negotiations. If you get it, determine who it came from and then respond. Write a note to that person but also keep an eye on the deadline. So even if you can't do it by the deadline, if it's a simple notice of violation you can take action to accommodate whatever it is that you've allegedly violated. Remember, if you can't do it in the timeline that they provided, call them. Ask for some extra time to comply.
Kevin Braig: Make sure to take everything seriously and act quickly because there are no small environmental problems. I've seen smaller businesses in the past that aren't part of the regulatory process in any great depth who thought, 'Don't they know what's going on here? This is not a big deal.' I would caution against making that assumption. It can be very, very costly if you don't deal with it right away. You don't want to wait until you get your second or third notice of violation. You want to act right away.
Mary Ann Piorier: Echoing what Michael and Kevin both said, start out on the right foot by making it clear that you are working with EPA. Make it clear that you're not ignoring their interest in your operation. Communicate that you take their inquiry very seriously, you want to be in touch frequently and you want to understand what is driving the issue. But you also want to be building up your arsenal to be able to respond appropriately and fully.
Moderator: Do local governments, who have environmental [City] Ordinances hinder or help growth in Ohio?
Kevin Braig: That's a very difficult issue because one of the things that businesses need when they get a state-issued permit is clarity. The common sense meaning is that I got permission from the state to do it. I should be allowed to do it. But more and more, we see a collateral attack by local government on the operations of the facility. So I think that's a very, very big issue for the state of Ohio. When a business gets a permit from the state of Ohio, what does that mean? Is it only for the benefit of the people outside that permit, the general public or does the permit actually confer some benefits on the business who goes through the trouble and expense to get the permit and agrees to comply with it. But we have seen enforcement actions and other campaigns against companies that have permits and are in compliance with the permits. You would think that if you're in compliance you should be safe. But we're seeing more instances of what I would call collateral attacks. That's a very big issue and I think it requires a cooperative model of government. The government should stand up for the businesses that are permitted every bit as strongly as they stand up when an enforcement is carried out for those who violate their permit or are in violation of the law. That's the other side of that issue. That's the only way to be fair and that's the only way to have a business environment where business has a chance.
Michael Kerr: I recently saw a case, not in Ohio, although there are instances of that being tried in Ohio, where a city, a municipality has gotten wind of a company wanting to build a manufacturing plant and it doesn't exactly align with the founding fathers' philosophy of what the city or the community should be, or look like, and suddenly you get three or four council people introducing an ordinance that is very prescriptive in nature. But what's interesting is the local Ordinance addresses specifically what the incoming manufacturer could generate, as a waste, and the amount of water and wastewater they could use and ultimately discharge. The Ordinance is then crafted to not allow such a discharge. I've seen that and I've heard of it, and so, many local Ordinances while thought of and well-intended, sometimes are detrimental to growth, or crafted to not allow for growth. They have an odor ordinance here in Cincinnati, very proscriptive. And as I sit here I recall it clearly — I'm in my office and a construction fellow is coming to Cincinnati to meet with a company that is possibly going to take over a building here. He called me and said, 'Michael, here's what they do. He explained it exactly. And I asked is there an odor associated with that? And he said, 'Oh, yeah, it's really bad.' I told him it's not going to fly because there is an odor ordinance down here that is proscriptive in nature and impacts certain manufacturing entities. The deal died right there.
It's the same in Dayton, where we have the well field protection program that was created in 1988. Here you have a local focus that did warrant a local response because there was no State policy at the time and the need was dire – protect the well field! So, Dayton took it upon themselves to craft a local Ordinance to protect the aquifer. A great idea, I commend them for that action; it was recognized nationally, and quite frankly, was the foundation of the other numerous well field protection programs around the United States. That was 1988. So here we are in 2010 and apart from one or two minor tweaks, it's still in place. However, here we are in 2010 and we have technological advances. We have mandated pollution prevention requirements that have resulted in chemical changes. We have new science that suggests that this chemical or that chemical is not what it used to be. So you have all these changes, you have additional state and federal regulation schemes, programs that manage that kind of activity, protecting the well fields and it's not been embraced and what does that do? Because it's still an Ordinance and it has very proscriptive requirements, companies can't grow, companies can't move into that particular area of the City, no matter how small that area is, and that's not good. But I must also say, we are beginning to see change, and the application of common sense, and the recognition that not all chemicals are bad, or could impact the well field if released.
So there's a strong argument here for change. Ordinances have their place but I think if you do implement any ordinance in your community, down here in Cincinnati or Dayton or wherever, provide the opportunity for that ordinance to be revised and reflect today's technology, today's environment, today's philosophical approach to manufacturing and the associated regulations that now mandate pollution prevention, etc.
Moderator: Are regulators basing their actions on science?
Mary Ann Poirier: The word science is a loaded word because many have the notion that science is something that is very precise, like 2 plus 2. But all "science" is based on assumptions. For example, as part of my undergrad curriculum in chemical engineering, I had to take physical chemistry. And the formulae you use in p-chem are loaded with fudge factors! So there could be 10 assumptions in one formula to get to an answer; think of the possible swings in the output. You can see varying opinions on what the real "science" is in the realm of climate change. You have scientists that say A and you have scientist that say B, and you have scientists that might have considered certain data and you might have scientists that didn't. Just a year ago you had ClimateGate which brought to light how unexpected data are handled. And what science you rely on might have a lot to do with your philosophical leanings, your views on manufacturing, your views on how to handle discrepancies in data, your views on a whole lot of things. To roughly paraphrase the Chief Science Advisor at U.S. EPA — Dr. George Gray — during the time I was there, it's often difficult to realize that a question is not a pure science question, but rather it's really a science-policy question; that is, policy is wrapped up heavily in the "scientific" decision being made. So I would say that regulators are basing their decisions on science, but their science might be coming from a different source than what manufacturers might be using as their science, and policy plays a significant role as well. What science to consider and how is just part of the debate and process. Where environmental consultants and attorneys come in is to make sure that all the relevant science is reviewed in a regulatory process, that the process and record are well-informed by multiple experts, not just experts that say "A". We want also experts that say "B" as well, because there's no such thing as decisive science. The regulators should be basing their policy decisions on full consideration of all science.
Moderator: OK, we've already established that when a manufacturer wants to or needs to expand, they should get their lawyers involved. But what's the biggest nightmare that they will encounter as part of that process?
Timothy Hoffman: I think it is the speed with which they can do what they want to do. And that is what hopefully will change the most in the next couple of years, especially in this economy. There are some good things going on in the economy where some businesses have a chance to increase their production and what they've done is they've rolled their production back and sometimes their permits have been rolled back to meet that production rather than staying at the levels they were at two or three years ago. And now what they're saying is, 'I'd like to get back to where I was three years ago and then maybe get beyond that. The problem is that business usually needs to have that regulatory decision yesterday and the regulator may not be able to make that decision or won't make that decision for months and the opportunity may be lost. That goes back to your question about the globalization of the economy. Companies might like to see a manufacturing operation in North America to support a part of a product line, but if they have to pass through too many regulatory hurdles and can do it somewhere else in the world that's less difficult for them to put that production there, they're just going to do it somewhere else and ship it here. So that's what we're hoping to see for our clients. Some way to get through, to get on fast track if you will. When a business makes a decision, can we get government in line with them to say how do we help you implement that decision rather than reviewing things for months, which may kill the opportunity. That's their biggest nightmare — the timing.
Moderator: Does Ohio have a fast track for any of their environmental programs?
Timothy Hoffman: It would claim they do, but in practice, and Mary Ann you might want to address that, I'm not sure it's at all fast.
Mary Ann Poirier: Right, and one example is in the air context, dealing with Ohio EPA. They have certain permits called general permits that basically are "form" permits for certain types of sources. You might like the attractiveness of the general permit process, because it promises efficiency. You're supposed to get your permit within six months, assuming everything goes smoothly. But as part of that process you have to sign and verify that your emissions will never exceed such and such a level. You might not want to do that as a business owner, to certify that I will always do such and such, because you don't know what's going to happen down the pike — if something goes wrong, if you have a windy day and particular matter disperses more than normal, whatever the case might be. I think what would be nice with the new administration in Ohio is if they would be more willing to entertain the idea of variances. Suppose we have a certain manufacturer that wants to expand its operations. They know they need to get a limit raised in their permit, but they're looking at that being a year to two year long process, and they don't have the time to wait through all that uncertainty because of business decisions they need to make today. Could you get Ohio EPA willing to say, 'OK, we're going to work with you in that process and get that permit revised as needed, but in the meantime you can have a variance to allow you to go ahead and work toward that expansion, to go ahead and hire employees'? It would be great to get that certainty in place that businesses need today.
Michael Kerr: While not directly related to environmental regulation, I can give you a specific example of where a "fast track" system would be great. Just recently, a company here in Ohio has made the strategic decision, by virtue quite frankly of the economy to grow into a new market. This new market sector demands that the building housing the equipment comply with very specific requirements. So, the local company here decides to add a 30,000 square foot addition to their existing building. So off they go acquiring real property. They are prepared then to start their expansion in earnest, they start to think about construction. They contact the City and the City, politely says, "You need to sit down and talk to us." And lo and behold you go into a meeting and you're seen by seven city zoning, building, economic development and engineering people and I'm handed three other business cards with the "off-the-cuff" directive that [these] are three other people I need to talk to! So in totality, I need to talk to 10 entities within the municipality and each of them start throwing out, "Well, here's your first hurdle Mr. Kerr and here's your second." There are actual quotes from the city officials. And my client is sitting beside me and all they want to do is grow their operation to address the economic challenge they face today. All they want to do is embark upon a new direction; a new product line and then they hear this is going to take you nine months for you to do this. This is going to take you seven months, but you can do them in parallel. Oh, and by the way, you need to hire an architect. So it's not only environmental issues that could be placed on a fast track, other areas should be looked at also.
Moderator: You mentioned a roomful of regulators: Is there any difference in how you handle state regulators versus federal regulators versus a group of local regulators?
Kevin Braig: I definitely think so. You have to remember when you're on the local level that you'll really find a difference in regulators. It's much more personal. It's very personal for them and you should respect that. In some respects it makes it more challenging, but definitely spend a lot of time talking to people and make sure that you're available. Make very clear that they can call you anytime. As you move up from local to state and you get more removed from the neighborhood, you run into different challenges. They come from dealing with several persons to the actual physical site, so you do have to deal with that a little bit differently. It may be harder, but it is a little bit different.
Mary Ann Poirier: The commonality between all of them though is to engage with them. Treat them with respect. I think it can be easy to sit in your isolated little world of wanting to get a project up and running and think, 'Oh, they — the regulators — are out to get us or don't know what they're doing.' But that attitude is completely wrong. While at the U.S. EPA, I worked hand and hand with incredibly talented and dedicated EPA career employees. They're just professionals doing their job, but with a very different view point and a very different set of marching orders than, say, a manufacturing executive; that is, the regulators' task is to execute the law as they understand it. The key of any relationship with regulators, no matter what level you're at, is respect.
Moderator: Will regulators fight for the integrity of their programs, especially when special interests attack the programs businesses are operating under in a law-abiding manner?
Timothy Hoffman: On the subject of protecting regulatory programs, I think the regulators are sometimes looking over their shoulders at the scrutiny they may get from the outside (special interests) on decisions they make with respect to the business community and the regulated community, who are primarily our clients. It's another issue that I think they're sometimes worried about. What's going to happen if they make a decision that appears to be favorable to a business interest and that is not favorable to that activist's interest? So there's a balancing act that goes on. I don't think our clients who are the regulated community object to being regulated. They just need to get on with their business, whatever that might be and I think that's another reason things are slowed down. I think there may be regulators thinking "what's going to happen to me if I make a decision that looks like it's favorable to the business interest?" That's at the heart of it.
Michael Kerr: And I will just add that it goes back to the question you had earlier with respect to what we said about how Ohio EPA may change under this new administration. More specifically, how OEPA is funded. Let's say you have a new technology, a tested new technology for disposal of solid waste, trash. More specifically, a gaseous diffusion plant. This system does nothing but gobbles up trash and generates a by-product that can be recycled or reclaimed. So basically you process trash through this plant and you wind up with instead of a ton, you've got half an ounce of material. Well, Ohio EPA is funded in part through tipping fees, so now that revenue stream has gone away. So it begs the question: "Is Ohio EPA going to be amenable to issuing a permit to a gaseous diffusion plant that's going to eliminate a revenue source? There needs to be a complete rethinking of how they're funded so that they can still execute their mission, but reflect the technology changes and what manufacturers and businesses are engaged in.
Moderator: Are state programs that are designed to encourage people to reuse contaminated property working?
Timothy Hoffman: I'll take a shot at that one. We've got a voluntary action program here in Ohio that was designed to do just that. I think it was one of those programs that was designed to be almost self-implementing, where a party could come in and clean up a contaminated brown field, submit the certificate from a certified professional to the state, which would then entitle the party that owns that property to a covenant not to sue. That has evolved into a program that works some of the time, but in a number of other situations there are such complicated eligibility criteria to put a property into the voluntary action program that it too has become a regulated program that's not hitting the mark. At least not the way it was designed to because, for instance, if you have an underground storage tank on a piece of property, that has a separate regulated program under the State of Ohio and you've got to tackle that issue first before you can take advantage of the voluntary action program. I think all of us on this side of the table would love to see some one-stop-shopping, where if you put a property into the voluntary action program, because you otherwise are not going to get it cleaned up, then the state should be embracing the fact that you're doing that and dealing with every environmental issue that's on that piece of property in that program. It's just another one of those pieces of legislation and programs that we're hoping to see streamlined a little bit as things go on over several years. And the voluntary action program, like the Dayton well field ordinance, is very well intentioned, but in practice it just gets bogged down because of eligibility issues, competing interests on those eligibility issues and that sort of thing.
Moderator: You mentioned the election and what do you think about the lame duck session? What are you watching for or expecting?
Timothy Hoffman: It's pretty clear there's not going to be any attempt to get Cap and Trade back on the table. In the next two months that's the only big lame duck issue that I can think of on the environmental side. I think the message is clear not to touch that.
Mary Ann Poirier: I have heard rumblings on the federal side that perhaps appropriations could be handled in such a way that certain undesirable programs could effectively be stopped. But we'll just have to wait and see.
Kevin Braig: I heard you might see that the executive branch will actually get busier because they want to try to simply get whatever legislative initiatives are left, through the administrative process and out of Capitol Hill and into the rules and regulations process because the executive branch hasn't changed in the election.
Mary Ann Poirier: That would create not just more permit issues and regulatory issues, but it might generate a fair amount of litigation. If the federal administration tried to ramrod things onto the states and, in so doing, doesn't follow the procedure that should be followed, then that could generate a fair number of court challenges.
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