The EPA proposes formally to determine not to impose financial responsibility requirements on the chemical manufacturing industry under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). In order to be considered by the EPA, comments from the public must be received by the agency no later than 11:59 PM Eastern time on April 21, 2020.

Summary of the Proposed Regulatory Action:

The regulatory action EPA proposes would be a formal determination by the agency that it will not exercise its authority under CERCLA to require owners and operators of chemical manufacturing facilities to establish and maintain evidence of financial responsibility “consistent with the degree and duration of risk associated with the production, transportation, treatment, storage, or disposal of hazardous substances.”  In other words, chemical manufacturers would not be required to establish and maintain evidence of financial responsibility and capacity to cover the costs that would be associated with remediating potential releases of hazardous substances from their facilities. (Note: Even though this action does not involve changing or adding a specific regulation in the published Code of Federal Regulations, it meets the definition of a “rule” under the Administrative Procedure Act, and as such is subject to the requirement of advance public notice and opportunity for comment.)

The Basics:
Background: CERCLA (the Superfund Statute) 
  • The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), as amended by the Superfund Amendments and Reauthorization Act of 1986 (SARA), establishes a comprehensive response and cleanup program to address events causing environmental damage.
  • Generally, CERCLA (sometimes referred to as the Superfund law) authorizes EPA to undertake removal or other remedial actions in response to any release or threatened release into the environment of “hazardous substances” or, in some circumstances, any other “pollutant or contaminant.”
  • CERCLA authorizes the EPA to compel action by liable parties in response to a release or threatened release of a hazardous substance that may pose an “imminent and substantial endangerment” to public health or welfare or the environment.
  • The statute also imposes liability for response costs on various parties, potentially including past owners and operators of industrial facilities, current owners and operators, and certain generators, arrangers, and transporters of hazardous substances. This liability for costs and damages includes all costs of removal or remedial action incurred by the Federal Government,
  • CERCLA authorizes and directs EPA to identify classes of facilities that might incur this type of liability and develop regulations requiring owners and operators of such facilities to establish evidence of financial responsibility “consistent with the degree and duration of risk associated with the production, transportation, treatment, storage, or disposal of hazardous substances.”

EPA’s Previous Actions:

  • In July 2009, EPA identified certain hardrock mining and mineral processing facilities as the first group of facilities for which EPA would evaluate the need for development of financial responsibility requirements under CERCLA section 108(b).
  • In 2010, the Agency identified three other industries: the chemical manufacturing industry; the petroleum and coal products manufacturing industry (which primarily includes refineries and not coal mines); and the electric power generation, transmission, and distribution industry as additional classes of facilities for which EPA could develop, as necessary, financial responsibility requirements under CERCLA Section 108(b).
  • On January 11, 2017, the Agency published notice of its determination to proceed with a rulemaking process that would either develop proposed financial responsibility requirements under CERCLA 108(b) for these industries, or determine such requirements are not warranted.
  • On December 1, 2017 (after giving the public notice of proposed rulemaking and an opportunity to comment), EPA announced its final decision not to issue final regulations for financial responsibility requirements for hardrock mining and mineral processing facilities.
  • In July and December of 2019 respectively, EPA published proposals to not impose financial responsibility requirements under CERCLA for facilities in the electric power generation, transmission, and distribution and the petroleum and coal products manufacturing industries. The public comment periods for those proposals have already ended.
  • The most recent proposal, on which EPA invites comments from the public until April 21, is to decide against CERCLA financial responsibility requirements for the chemical manufacturing industry — the last of the four industries for which the Obama-era EPA had decided to consider imposing such requirements.
  • If EPA finalizes its present proposals, the result will be that facilities in none of the four industries identified in 2010 as potentially warranting imposition of financial responsibility requirements under CERCLA Section 108(b) will be required to establish evidence of their financial responsibility and capacity to pay the costs of cleaning up hazardous substances their operations may emit into the environment and remediating environmental disasters those operations may cause.
The Agency’s Justification for the Proposed Action:

According to the EPA, its proposal is based on the Agency’s interpretation of the CERCLA statute as well as analysis of the need for industrial financial responsibility in light of the risk of taxpayer funded cleanups at facilities in the Chemical Manufacturing Industry operating under modern management practices and modern environmental regulations. EPA interprets the statutory section directing it to identify classes of facilities on which to impose financial responsibility requirements to leave the Agency discretion to decide that no such requirements actually needed or warranted.  In proposing to make this determination for chemical manufacturing facilities, EPA relies heavily on a conclusion that the risk of significant environmental damage from chemical manufacturing facilities is low, in light of current prevailing practices for management of hazardous substances at such facilities, as well as existing Federal and state regulatory controls on those practices.  The Agency contends that the degree and duration of risk associated with the modern production, transportation, treatment, storage or disposal of hazardous substances by the Chemical Manufacturing Industry does not present a level of risk of taxpayer funded response actions that warrant imposition of CERCLA financial responsibility requirements for that sector.

Additional Information and Resources:
Section 108(b) of CERCLA directs, in relevant part, that the “President shall promulgate requirements … that classes of facilities establish and maintain evidence of financial responsibility consistent with the degree and duration of risk associated with the production, transportation, treatment, storage, or disposal of hazardous substances,”  and  “shall identify those classes for which requirements will be first developed and publish notice of such identification in the Federal Register,” by a statutory deadline that is long-past.  The statute also states that “[P]riority in the development of such requirements shall be accorded to those classes of facilities, owners, and operators which the President determines present the highest level of risk of injury.” (* Note: Presidential authority under this statutory section has been delegated to the EPA.)
Under the EPA’s interpretation of this language, CERCLA financial responsibility requirements do not actually have to be put in place, notwithstanding express language directing that the Executive “shall promulgate requirements.”  Moreover, even though the Executive was directed to publish Notice in the Federal Register identifying classes of facilities “for which requirements will be first developed’ — and the Federal Register Notices presumably complying with this directive identified facilities in the chemical manufacturing industry (as well as in the hardrock mining and mineral processing industry; the petroleum and coal products manufacturing industry; and the electric power generation, transmission, and distribution industry), EPA’s view is that facilities in the identified industries must be considered for imposition of financial responsibility requirements, but need not actually be subjected to those requirements.
Whether EPA’s reading of the statute is correct, or whether it threatens to thwart the intent of Congress that industrial facilities be held financially responsible for environmental damage, is a question that may well be the subject of future litigation challenging EPA’s actions.
The EPA’s Notice of Proposed Rulemaking sets out the Agency’s reasoning and arguments, as well as the details of its proposal; and you may wish to review that entire document.  The EPA’s website also includes a summary explanation of the topic of Superfund Financial Responsibility, with sections on each of the four industries evaluated (but so far rejected) for imposition of financial responsibility by the EPA.
You can read an article about the present EPA proposal concerning the chemical manufacturing industry in the EHS Daily Advisor.  The EPA’s reasoning for not imposing financial responsibility requirements on chemical manufacturing facilities is similar to its rationale for not imposing such requirements on other industries.  Accordingly, you may also be interested in reading previous articles about the decision not to subject the mining industry to CERCLA financial responsibility requirements in publications such as Earthworks, and JD Supra.  An article on the website of the law firm Husch Blackwell (a firm that represents mining industry clients) also addresses the final mining industry rule, describing it as a major reversal of Obama-era environmental policy and identifying the chemical manufacturing and energy sectors as “up next” for similar reversals.
If You are Ready to Comment on the EPA’s Proposal: 

If you are ready to comment on the EPA’s proposal not to impose “Superfund” financial responsibility requirements on chemical manufacturing facilities, the easiest way to do so is to go to the Comment Page for this topic on the Government’s eRulemaking website, type you comments into the box provided for that purpose, and follow the other instruction on that page for comment submission.

Alternatively, you can mail comments in letter form (identifying Docket ID No. EPA-HQ- SFUND-2019-0086 in the subject line) to the following address:

U.S. Environmental Protection Agency
EPA Docket Center
Docket ID No. EPA-HQ- SFUND-2019-0086
Mail Code 28221T
1200 Pennsylvania Avenue, NW
Washington, DC 20460

If you choose to use Express Mail, hand delivery, or a courier service instead of regular mail, however, a different address should be used:

EPA Docket Center
WJC West Building, Room 3334
1301 Constitution Avenue, NW
Washington, DC 20004

All comments, irrespective of the method of submission, must be received by the EPA no later than 11:59 PM Eastern Time on April 21, 2020, in order to be considered.