1. IDEM Update Indiana Industrial Operators Association April 18, 2007 Thomas W. Easterly, P.E., DEE, QEP Commissioner IN Department of Environmental Management

2. New State Laws impacting IDEM from the 2006 Legislative Session HB1110—Removal of Mercury Convenience Switches from End of Life Motor Vehicles. SB 234—Improving the rulemaking process for wet weather discharges and authorizing the Environmental Stewardship Program. HB1117—Simplifying the solid waste statutes and eliminating the groundwater task force. SB 146—Removing the Property Transfer Disclosure Form from Statute.

3. IDEM’s Environmental Goal Increase the personal income of all Hoosiers from the current $0.88/$1.00 of the national average to at least $1.00/$1.00 of the national average while maintaining and improving Indiana’s Environmental Quality.

4. Pilot 2006 Environmental Performance Index Yale Center for Environmental Law & Policy Yale University Center for International Earth Science Information Network (CIESIN) Columbia University http://www.yale.edu/epi/

6. How Will IDEM Help Increase Personal Income? Clear, consistent and speedy decisions Clear regulations Assistance first, enforcement second Timely resolution of enforcement actions Every regulated entity will have current valid permits without unnecessary requirements Written Standard Operating Procedures Improved staff training and development

7. Performance Metrics Quality of Hoosiers' EnvironmentResultTargetComments % of Hoosiers that live in counties that meet air quality standards 85%100%80% 2 counties @ 964,725 of 6,271,973 failed % of CSO Communities with approved programs to prevent the release of untreated sewage 48%100%20% 75% by 2007 is goal Permitting Efficiency Total calendar days accumulated in issuing environmental permits, as determined by state statute Land 81,72666,56586,864 208 permits 699 permits 82 permits Air 321,262207,000385,000 Water 85,44348,000200,000 * Places emphasis on back logged permits Compliance Total percentage of compliance observations from regulated customers within acceptable compliance standards Inspections 96.84%97%75% Self reporting 94.99%99%95% Continuous monitoring (COM) 99.61%99.90%98.95% * Tracks observations and not just inspections Organizational Transformation Budgetary agency dollars spent on key outside contracts for core agency functions. Dollars spent on outside services per year $3,100,00$0$3,447,017 Will require increase in head count to accomplish

8. Counties above AQ Standards January 10, 2005 Allen--Ozone Boone--Ozone Clark—PM & Ozone Dubois--PM Elkhart--Ozone Hamilton--Ozone Hancock--Ozone Madison--Ozone Marion—PM & Ozone Shelby--Ozone St. Joseph--Ozone January 1, 2007 Clark--PM Marion--PM

9. Communities with Approved CSO Long Term Control Plans Akron Albion Angola Aurora Avilla Berne Bluffton Boonville Brazil Bremen Brownsburg Butler Centerville Chesterfield Columbia City Columbus

10. Communities with Approved CSO Long Term Control Plans Crawfordsville Crown Point Decatur Frankfort Goshen Greenfield Indianapolis Kendallville Knox LaGrange LaPorte Lowell Madison Markle Michigan City Milford

11. Communities with Approved CSO Long Term Control Plans New Haven North Vernon Ossian Plainfield Plymouth Rockport Remington Seymour South Whitley Sullivan Valparaiso Veedersburg Wakarusa Warren Warsaw Waterloo Winamac

12. Permitting IDEM is still meeting the statutory deadlines for permit issuance, as reported in past years IDEM now tracks the total calendar days a permit is in house and is applying a deadline to permits that traditionally do not have a statutory deadline; as a new interpretation to the intent of statutes

13. Total Permit Calendar Days

14. Percent of Activities Meeting Regulations

15. Office of Enforcement 2002-2007 200220032004200520062007* Referrals887607467547591134 Violation Letters17334720323147 Notice of Violations 56145731820242766 Agreed Orders31134931425841762 Commissioner's Orders 15 641387 Dismissals1251214448465

16. Major Regulatory Initiatives Regulations to facilitate the proper management of e-Scrap Rulemaking to require the removal of mercury convenience switches from automobiles prior to crushing or shredding Rulemaking to allow Performance Track (Indiana Environmental Stewardship Program)—Charter Members Announced in February 2007

17. Major Regulatory Initiatives Outdoor Wood Fueled Boilers—EQSC Report recommended waiting to proceed until EPA issues its model rule in January 2007 Utility NOx, SO2 and Mercury emission rules: CAIR, which regulates NOx and SO2, was adopted by the Air Pollution Control Board in November. CAMR, regulating mercury, was due to EPA on November 17, but Indiana does not have a Final Rule because there has been no resolution of issues between Utilities which favor the federal program and the Hoosier Environmental Council which favors a 90% reduction—APCB May 2, 2007

18. Major Regulatory Initiatives Rulemaking to establish presumptive 8-1-6 VOC BACT controls to streamline permitting: Acid Scrubbers for foundry core making amines— Withdrawn at Request of INCMA Compliance with certain NESHAPs--Continuing Ethanol Plant BACT—Final Adoption 12/6/2006 Possible statewide regulations on the formulation of consumer products (i.e. air fresheners, deodorants, etc.) and paint products to ensure continued compliance with the Ozone standard and reduce our impact on neighboring States—First Notice Soon Adjustments to the Title V fees to fully fund the program—Air Board Adoption 12/6/2006

19. IDEM Fees & Fund Balances Title V Example Significant Communication Challenge: Auditor reports the “check book balance” for each fund on June 30 IDEM collects almost all of its Title V fees in the 2 nd Quarter of each year. IDEM’s June 30 fee balance is similar to a person’s check book balance right after depositing their paycheck IDEM must pay all of its bills until the next pay day (next June 30) without overdrawing

20. IDEM Fees & Fund Balances Title V Example For the last five years (FY 02-FY 06), Title V fund expenditures have exceed revenues by $5,771,277, yet the June 30, 2006 check book balance was $10,039,779 which many people believe is a healthy fund balance. This fund balance is insufficient to cover the estimated $10,587,184 in expenditures up to the date of receipt of new funds in the 2 nd Quarter of 2007.

21. IDEM Fees & Fund Balances Title V Example The “payday checkbook balance” minus the expenditures before the next pay day gives the “minimum cash in the check book” which is projected to be negative by $547,405 during FY 06. The actuarial fund balance (assets less contracted liabilities) is much worse because the fund has $6,131,187 in contractual obligations and its projected lowest net worth is actually a debt of $6,678,592.

22. 05-06 Available Cash by Month

23. 2007 Legislative Issues Budget—SB432 Federal Funds continuing to decrease State General Funds fluctuate Dedicated Funds: Except for Title V, fees collected for do not relate to program costs— some programs like Methamphetamine Clean-up and Mercury Switch Management completely unfunded (Recently adjusted Title V fees) Consider Prohibiting the Commissioner from renewing a permit for a facility that was not constructed or has not operated for the past 5 years—SB205

24. IDEM Budget Comparisons (w/o ELTF) 2005-2007 $240,798,257 2007-2009 $206,249,350 Federal: $57,530,097 (27.9%) Red General: $61,750,166 (29.9%) Lt. Aqua Dedicated: $86,969,087 (42.2%) Green Dedicated: $91,318,803 (37.9%) Green Federal: $84,618,622 (35.1%) Red General: $64,860,832 (29.9%) Lt. Aqua

25. IDEM Fees (Thousands) FY 07-09AirWaterLandTotal Income$19,815$22,100$27,500$69,415 Expense$25,008$27,296$37,571$89,875 Spend Down -$5,193-$5,196-$10,071-$20,460 Annual-$2,596-$2,598-$5,036-$10,230 Proposed Increase $2,500$2,461$4,094$9,056 Efficiency$96$137$942$1,174

26. Fee Proposals CAFO/CFO – 25 staff (17 FTEs) Fee Revenue: $42,000 Expenses: $1.2M Proposed Fee Revenue: $2.8 Annual Number of permits issued: 121 Annual Number of Permit renewals: 435 Number of Compliance Inspections: 1100 (Proposed)

27. Fee Proposals NPDES – 79 staff Fee Revenue: $3.8M Expenses: $6.2M Proposed Fee Revenue: $4.75M Annual Number of permits issued: 340 Proposed increase is 25%

28. Fee Proposals Drinking Water/Wastewater Operator Certification – 6 current staff Fee Revenue: $146,000 Current Expenses: $471,000 Proposed Fee Revenue: $526,000 (would add 3 staff) Annual Number Certifications/tests issued: 4469

29. Wastewater Operator Biennial Renewal Fees ClassificationCurrentNewIncrease Annual Increase Class I-SP$30$60$30$15 Class I$30$60$30$15 Class A-SO$30$60$30$15 Class A$30$60$30$15 Class II$30$80$50$25 Class B$30$80$50$25 Class III$30$100$70$35 Class C$30$100$70$35 Class IV$30$120$90$45 Class D$30$120$90$45 Water System Operator Triennial Renewal Fees All$30$150$120$40

30. Fee Proposals Wetland/Water Quality Certification – 7 staff Fee Revenue: $0 (60% federal funds/40% state funds) Expenses: $538,000 Proposed Fee Revenue: $96,900 Proposed General Permit Fee $100 Proposed Individual Permit Fee $200 Annual Number of permits issued: 760

31. Fee Proposals Storm-water Fees – 8 current Staff Fee Revenue: $365,000 Expenses: $698,000 Proposed Fee Revenue: $1.4M (add field staff for inspections) Annual Number of permits issued: 4,050 Rules 5, 6 and 13 have been funded through fees and enforcement fines

32. CurrentProposedIncrease Rule 5$100$400$300per NOI Rule 6$100$150$50Annually MS 4 by Population 1-999$0$250 per NOI 1,000-2,999$0$500 per NOI 3,000-4,999$0$750 per NOI 5,000-6,999$0$1,000 per NOI 7,000-9,999$0$1,500 per NOI 10,000 and up$0$2,000 per NOI MS 4 by Type Non-municipal$0$500per NOI County System$0$2,000per NOI Note: 25% reduction if MS4 is co-permitted

33. Fee Proposals Hazardous Waste – 96 staff Fee Revenue: $1.3M Expenses: $8M Proposed Fee Revenue: $4.1M Permit Review, renewal, modifications and Corrective action plan reviews: 375 Federal funding (currently) 33% State funding (currently) 31% Fee funding (currently) 36%

34. Environmental Crimes Task Force SB286 Environmental Crimes Task Force Created by SEA 195 (2005) has been meeting since October, 2005. Chaired by Senator Kenley then Rep Walorski Developing more specific environmental criminal statutes.

35. 2007 Legislative Issues Streamlined Rulemaking when adopting Federal Requirements (including deadlines) without change SB154 Ask the 2007 EQSC to study Environmental Rulemaking Process SB154 Current Roles of Environmental Districts Regional Water and Sewer Districts Solid Waste Management Districts (Recycling) SB154

36. Questions Submitted in Advance Q. Where are we with the wastewater operator rule? A. Work group completed its work in August 2006, Second Notice scheduled for May, 2007. Fees in SB 432. Q. What are we seeing in terms of alternative fuel in IN. Are we actually going to have convenient gas stations where you can buy bio fuel? A. There are now 82 E-85 and 8 B-20 public pumps list is at: www.in.gov/isda/biofuels

37. Questions Submitted in Advance Q. What is IDEM doing in terms of economic development to help attract or keep industry? A. Clear, Consistent and Speedy decisions. Q. Why are we getting Copper numbers on industrial permits that are lower than background? A. Aquatic toxicity.

38. Questions Submitted in Advance Q. We have heard that several departments have been downsized and wonder if that will impact our permit? A. IDEM total staff is up 6 full time and 11 part time people since 12/31/2004. Permitting staffs have been increased and permit backlogs are going down. Still need staff in industrial pretreatment, operator certification, and storm water programs.

39. Questions Submitted in Advance Q. When will the continuing education coordinator be replaced? A. The current person is Tonja Fuller-White. Q. Where are we on the CSO Issue? A. Answered in presentation.

40. Questions Submitted in Advance Q. Where are we with the future of electronic reporting? A. 1. Let $5.9 million contract with CGI for overall system. Going program by program, three years to completion. 2. First State approved by EPA for CROMEER. 3. Digital Inspector 4. Virtual File Cabinet—some programs are on IDEM’s website now.

41. Questions? Tom Easterly 100 N. Senate Ave. IGCN 1301 Indianapolis, IN 46204 (317) 232-8611 Fax (317) 233-6647 teasterly@idem.in.gov