Yesterday, on January 11, 2017, the EPA issued a notice of intent to proceed with rulemaking regarding whether and to what extent financial responsibility requirements under CERCLA section 108(b) should apply to the Chemical Manufacturing, Petroleum and Coal Products Manufacturing, and Electric Power Industries.
The rulemaking will have an interesting path forward in light of its history and the upcoming administration change. On January 6, 2010, the Environmental Protection Agency (EPA) published an Advance Notice of Proposed Rulemaking (ANPRM) that identified additional classes of facilities within three industry sectors that could warrant developing financial responsibility requirements under CERCLA section 108(b): (1) the Chemical Manufacturing industry (NAICS 325); (2) the Petroleum and Coal Products Manufacturing industry (NAICS 324); and (3) the Electric Power Generation, Transmission, and Distribution industry (NAICS 2211). In August 2014, environmental groups filed a lawsuit in the U.S. Court of Appeals for the District of Columbia Circuit, for a writ of mandamus requiring issuance of CERCLA section 108(b) financial responsibility rules for the three additional industries identified by EPA in the ANPRM. EPA and the petitioners submitted and the court approved an Order on Consent, which included a schedule for further administrative proceedings under CERCLA section 108(b). Critically, in granting the motion to enter the Order, the D.C. Circuit recognized that “the content of [the rulemaking required under the Order] is not in any way dictated by the [Order].” Therefore, the upcoming administration may be bound to entertain the process of rulemaking, it appears free to disregard producing any rule as a result of this process.
This Notice satisfies that Order. Although the Notice is “not a determination that requirements are necessary for any or all of the classes of facilities within the three industries, or that EPA will propose such requirements,” EPA did discuss and dismiss the arguments that the potentially regulated industries raised. For example:
- EPA rejected that RCRA’s financial responsibility requirements were sufficient because those requirements are “more narrowly designed to assure compliance with those closure requirements.”
- In selecting these industries, EPA relied on the Toxics Release Inventory (TRI), and RCRA’s national Biennial Report (BR), and, according to EPA, “[n]one of the commenters submitted data to dissuade the Agency from the path of acquiring additional and more comprehensive information for these industries.”
- Industry believed that by using the National Priorities List (NPL), the EPA was not giving credit to the fact many of those sites either did not remain in production, or had practices that were improved based on environmental regulations issued after the initial contamination. EPA instead stated that the NPL analysis was informative and there was no evidence that the risks were completely eliminated at these sites.
- Finally, EPA rejected industries’ argument that they generally are healthy and not at risk for bankruptcy, stating that “[e]conomic solvency at an industry-wide level is not a substitute for insurance against the possibility of CERCLA liabilities remaining unsatisfied on a facility-specific basis.”
In sum, EPA is bound to entertain a rulemaking regarding the financial responsibility requirements for these industries, but it remains to be seen whether the same concerns that the Obama EPA recognized in this Notice will similarly motivate the Trump EPA to produce a rule. The Notice is available here.