The U.S. Environmental Protection Agency (EPA) finalized and proposed a number of rules and guidance in 2015 − changes the regulated community will need to monitor closely in 2016, including how many states may implement versions of such rules and guidance in response. The following are some of the more material areas to follow in 2016.

Waste Management

Definition of “Solid Waste”: EPA continued in 2015 to attempt to redefine fundamental regulatory terms under its primary statutes. Its new rule defining “waters of the United States” under the Clean Water Act generated numerous judicial challenges, which overshadowed its publication early in 2015 of a new regulation under the Resource Conservation and Recovery Act (RCRA) defining, once again, the fundamental regulatory term “solid waste.” “Definition of Solid Waste,” 80 Fed. Reg. 1694 (Jan. 13, 2015).

Spurred in part by environmental justice concerns, EPA intended with its modification of its 2008 definition of solid waste to prevent the mismanagement of hazardous secondary materials intended for recycling and to promote sustainable materials management by encouraging safe and environmentally responsible recycling. The rule imposes standards on generators and recyclers to ensure that hazardous secondary materials are in fact legitimately recycled.

The rule’s effective date was July 13, 2015, but in our federal system the rule’s actual effective date in most jurisdictions depends on regulatory action by the various states authorized to implement RCRA. Moreover, both environmental and industry groups filed petitions for judicial review of the solid waste rule, adding ongoing uncertainty. The regulated community will need to follow implementation of the rule on a state-by-state basis, while also staying tuned to potential judicial developments in 2016.

Coal Combustion Residuals (CCR): The long-awaited and much-maligned federal CCR rule, 80 Fed. Reg. 21,302 (Apr. 17, 2015) (40 C.F.R. pts. 257, 261), became effective on October 19, 2015. The CCR rule established, for the first time, national management standards for electric utilities’ disposal of CCR in landfills and surface impoundments. Despite several of the CCR rule’s provisions already coming into effect, uncertainty as to its future still looms in 2016.

The CCR rule may change as a result of continuing administrative challenges. Both industry and environmental groups challenged the CCR rule in the D.C. Circuit and filed their opening briefs in December 2015, with DOJ to respond in March.

  • Industry groups challenge EPA’s regulation of inactive impoundments no longer receiving CCR as outside the scope of EPA’s authority under RCRA to regulate “disposal.” Industry groups further challenge certain provisions as arbitrary and capricious and lacking adequate notice and opportunity to comment, such as the restrictions on CCR stored for beneficial use.
  • Environmental groups contend the CCR rule is arbitrary and capricious because it allows existing, unlined surface impoundments to continue to operate or be considered “lined” without any effective liners, and because it exempts certain impoundments from regulation. But, environmentalists dropped their challenge to EPA’s designation of CCR as nonhazardous waste.

The CCR rule may be subject to further changes in 2016 with potential legislation. For example, the Senate Committee on Environment and Public Works added the CCR rule to its 2016 agenda, indicating it may seek to grant EPA authority to establish CCR permitting programs or allow states to directly enforce the rule. Currently the CCR rule is “self-implementing” because it sets standards, but has no permitting mechanism or delegation to the states.

Management of Hazardous Waste Pharmaceuticals: Hazardous waste pharmaceuticals are currently managed under Subtitle C of RCRA. Healthcare companies and facilities have long expressed concern about compliance under a rule that is designed for manufacturing and industrial facilities instead of hospitals and clinics, long-term care facilities, pharmacies, and medical, coroner, dental, optical, and veterinary offices/clinics. Compliance issues have included healthcare workers who are not knowledgeable about disposal requirements and difficulties in determining which of the many products in a formulary are hazardous wastes when they are disposed.

EPA published a proposed rule in 2015 for the management and disposal of hazardous waste pharmaceuticals generated by healthcare facilities, with the comment period ending in December 2015. The rule is designed to promote the safe disposal of hazardous waste pharmaceuticals in a structure that works for healthcare facilities. As an example, in many instances the accumulation of hazardous waste pharmaceuticals would not count toward a facility’s total hazardous waste amounts, reducing the regulatory burden of these facilities. The rule establishes a set of sector-specific requirements including:

  • separate standards for non-creditable hazardous waste pharmaceuticals (those that are not expected to be eligible for manufacturer credit) and creditable hazardous waste pharmaceuticals;
  • standards applicable to pharmaceutical reverse distributors (persons who receive potentially creditable hazardous waste pharmaceuticals and accumulate the wastes while eligibility for credit is verified);
  • prohibitions against the disposal of hazardous waste pharmaceuticals down drains and toilets;
  • standards for the management of hazardous waste pharmaceutical residues that remain on containers; and
  • conditional exemptions of hazardous waste pharmaceuticals that are also subject to Drug Enforcement Administration regulations for controlled substances.

Comments on the draft rule generally were positive. However, the rule is structured such that states can impose more restrictive requirements on the management of hazardous waste pharmaceuticals, which could lead to multiple layers of regulation and some uncertainty. Another potential area of concern is the more restrictive timeframe for waste accumulation, to which pharmaceutical reverse distributors would be subject under the proposed rule. It remains to be seen how EPA will address these areas of concern in finalizing the rule and whether states will begin to implement more restrictive requirements, possibly in 2016.

2020 RCRA Corrective Action Universe: EPA has been working with states to meet EPA’s goal of achieving final remedies at 95 percent of the RCRA facilities that need corrective action by the year 2020. In 2011, the General Accounting Office (GAO) found, based on interviews with EPA and state officials, that the 2020 goal was unlikely to be met and recommended that “EPA assess the remaining corrective action workload, determine the extent to which the program has resources needed to meet 2020 goals, and take steps to either reallocate its resources or revise its goals. EPA agreed with the recommendation.”

With the arrival of 2016 leaving only four years to accomplish the goal, EPA is maintaining its ambitious goals for the RCRA Corrective Action program by creating the 2020 Corrective Action Universe. “The RCRA cleanup baseline includes 3,779 facilities expected to need corrective action and the universe contains a wide variety of sites. Some properties are heavily contaminated while others were contaminated but have since been cleaned up. Still others have not been fully investigated yet, and may require little or no remediation. Inclusion in the 2020 Universe does not necessarily imply failure on the part of a facility to meet its RCRA obligations.” The link to EPA’s website provides a variety of resources listing all facilities included in the 2020 corrective action baseline and showing which facilities have already met final remedy construction.

E-Manifest System and User Fees. EPA’s e-Manifest system , designed to replace the current multiple page and signature hard copy system, will begin functioning in March or April 2016 with full implementation by the spring of 2018. By the end of the second quarter of 2016, EPA will propose a user fee regulation for using the system. Only generators, haulers, disposal facilities and other waste handlers will pay the fee. States and members of the public who access the manifests will not. The goal of the fee will be to fully recover all costs of the e-Manifest system. The system is expected to affect about 160,000 regulated entities and reduce compliance costs for states and industry by $75 million annually.

TSCA Reform: After years of calls for reform of the nearly 40-year-old Toxic Substances Control Act (TSCA), Congress is on the verge of passing consensus legislation. On June 23, 2015, the House approved the TSCA Modernization Act, H.R. 2576, by an overwhelming vote of 398-1. Then on December 17, 2015, the Senate passed the Frank Lautenberg Chemical Safety for the 21st Century Act, S. 697. The two bills do have some differences, primarily the degree to which they preempt state chemical safety programs. The provisions common to both bills expand the number of chemicals that must be considered for prioritized screening, improves EPA’s ability to obtain safety information, requires EPA to work with other agencies to develop information and regulate chemical substances, puts in place more standards for the scientific basis EPA must use when determining chemical safety, and improves EPA’s ability to regulate chemicals that are found harmful. Given the overwhelming support of the narrower House bill, it appears as if conference negotiations could result in congressional approval of a final bill that significantly overhauls TSCA early in 2016.

Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) :

Superfund practitioners celebrated the 35th anniversary of the act in December. The statute was enacted late in the lame duck Carter administration, and was last amended in 2002. Litigation over fundamental issues continues to thrive, including consideration of the two substantial issues addressed in the last major Supreme Court CERCLA decision in 2009, Burlington Northern & Santa Fe Railway Co. v. United States − those of arranger liability and divisibility.

Two major decisions on arranger liability were handed down by U.S. Circuit Courts of Appeals during 2015. The Fourth Circuit held in Consolidated Coal Co. v. Ga. Power Co. that the sale of a product that allegedly contained hazardous substances did not constitute an arrangement for the disposal of the hazardous substances absent specific evidence of intent to dispose as required by Burlington Northern. The Eighth Circuit reversed summary judgment for the government in United States v. Dico,holding that the sale of a building that contained insulation contaminated with PCBs but which also had commercial value was insufficient evidence of intent on the summary judgment record.

Questions of divisibility and allocation of CERCLA response costs will continue to be litigated, especially at “mega-sites” − mining sites and rivers and harbors − where total investigation and remediation costs, as well as natural resource damages, run to the tens and hundreds of millions of dollars. In 2014, the Seventh Circuit issued a decision in United States v. Glatfelter holding that the harm at a major river site contaminated with PCBs could be divisible, and that apportionment, rather than joint and several liability, would apply. On remand, the district court initially found, in a May 2015 decision, that the harm was divisible. But in October, after motions for reconsideration, the court reversed itself, finding that the expert reports on which the divisibility defense rested were unreliable. Another in a line of district court decisions rejecting divisibility as a defense to joint and several liability was Emhart Industries v. New England Container Co., a District of Rhode Island decision that could be appealed to the First Circuit.

Other ongoing cases to watch on appeal during 2016 involve the CERCLA statute of limitations, including whether and which settlements trigger the running of the statute of limitations, and an Eastern District of Washington decision holding that air emissions of hazardous substances from a Canadian smelter trigger Superfund liability in the United States. Both the cross-boundary and disposal questions are now pending before the Ninth Circuit.

Vapor Intrusion

EPA Vapor Intrusion Guidance: EPA issued its final vapor intrusion guidance document, “Office of Solid Waste and Emergency Response Technical Guide for Assessing and Mitigating the Vapor Intrusion Pathway from Subsurface Sources to Indoor Air,” in June 2015. The guidance provides more certainty as to how to investigate and assess vapor intrusion, but may significantly increase remediation costs and add uncertainty to business transactions. The EPA technical guide will be applicable to CERCLA, RCRA and federal brownfield sites, and is meant to comply with the National Oil and Hazardous Substance Contingency Plan. For more information on EPA’s vapor intrusion guidance, see “ Haze of Uncertainty Surrounds EPA Vapor Intrusion Rules ,” Law360, July 2, 2015. EPA also issued in June 2015 its “Technical Guide for Addressing Petroleum Vapor Intrusion at Leaking Underground Storage Tank Sites.” For more on the petroleum guidance, see “ Concerns Seep Through EPA Petroleum Vapor Guidance ,” Law360, July 8, 2015.

States have continued to issue their own guidance on vapor intrusion. For example, in July 2015 the California Environmental Protection Agency and other state agencies issued an updated guidance, “ADVISORY − ACTIVE SOIL GAS INVESTIGATIONS,” intended to provide “a technical framework and reference for addressing soil gas sample collection and analysis.” Although these and similar guidance documents expressly disclaim any intent to impose regulatory requirements or obligations, they do tend to establish a standard of care for any vapor intrusion investigation and response.

Trichloroethene (TCE) : The assessment and management of TCE at sites continues to be an evolving concern. EPA Region 9 and some state agencies had issued guidance in 2014 for TCE sites, strongly recommending rapid, even immediate, response for short-term exposure to TCE in indoor air. The New York State Department of Health issued a “Fact Sheet on TCE in Indoor and Outdoor Air” in August 2015 that is illustrative. Although the document recognizes the limitations of the few studies that have reported an increased risk to fetal development, the agency nonetheless lowered its “guideline” for TCE in indoor air to 2 micrograms per cubic meter. More specifically, due to its concerns about exposure during pregnancy, the agency recommends “taking immediate and effective action to reduce exposure when an air concentration is equal to, or above 20 mcg/3.” The meaning of “immediate and effective” is not explained, but could be interpreted to mean relocation of workers or residents.

Proposed Change to the Hazard Ranking System (HRS) to Add Vapor Intrusion: EPA uses the HRS established under CERCLA to assess the potential threat of releases of hazardous substances, and sites scoring 28.50 or greater under the HRS are eligible for inclusion on the National Priorities List (NPL). The HRS currently uses ground water, surface water, air and soil exposure as the four pathways for scoring. EPA has indicated that it anticipates a proposed rulemaking in 2016 to add a new screening for vapor intrusion from contamination as part of the HRS scoring criteria. Regulated parties need to closely monitor how EPA approaches this rulemaking, with so many questions regarding the assessment of the potential for vapor intrusion, as it could increase significantly the number of sites eligible for the NPL.

Due Diligence and Real Estate Purchases

Possible Changes to Forest and Rural Land Phase I Standard: It’s now been eight years since ASTM issued its standard for meeting All Appropriate Inquiries (AAI) for forestland and rural property, titled “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process for Forestland or Rural Property” E2247-08. EPA modified the AAI regulations (40 C.F.R. pt. 312) to allow the use of E1527-13 to meet AAI in 2014 adding new definitions and requirements. Conforming changes to forest and rural land standards would be helpful to avoid confusion with terminology and other differences. If a new standard is issued, a rulemaking will be necessary before a new version of E2247 could be used safely to meet AAI. For more information on the existing forest and rural land standard, see “EPA Allows Use of New Phase I Environmental Site Assessment Standard for Forestland and Rural Property ,” Dec. 29, 2008.

Bona Fide Prospective Purchaser (BFPP) Defense : With the continued increase in real estate transactions, more opportunities will arise for litigation over contaminated sites. The case law to date has consisted of one federal district court case and two federal courts of appeals cases that provide only narrow guidance regarding the BFPP defense.3000 E. Imperial, LLC, v. Robertshaw Controls Co. (C.D. Cal. Dec. 29, 2010), PCS Nitrogen Inc. v. Ashley II of Charleston LLC (4th Cir. 2013) and Votggehenthaler v. Maryland Square, LLC (9th Cir. 2013). None of the three cases have provided any critical analysis of how strictly a purchaser must comply with the ASTM standard or the AAI regulations in meeting the “all appropriate inquiries” component of the BFPP defense, so purchasers are advised to comply as closely as possible with such requirements in purchasing real property and to comply with the other components of the BFPP defense. For more information on the ASTM Standard and BFPP defense, see: ASTM Releases New Phase I Standard: What Does It Really Mean for Purchasers?

Self-Reporting Violations Electronically

EPA will continue the rollout of its electronic system for self-reporting certain violations under the agency’s 1995 audit policy. That policy allows regulated entities that on their own discover environmental noncompliance to voluntarily report the violations and be subject to either no or reduced penalties. The electronic reporting system that became operational in December of 2015 allows for reporting of certain routine violations of the Emergency Planning and Community Right-to-Know Act (EPCRA) along with certain violations of CERCLA. As to EPCRA self-reporting, the system automatically issues a notice confirming that the violations are resolved with no penalty. The CERCLA system automatically issues a letter stating that EPA will determine eligibility for a reduced penalty if and when the agency considers enforcement action. All other requirements of the 1995 audit policy remain in effect, including the requirement to report a violation within 21 days of discovery.