On November 25, 2020, the U.S. Environmental Protection Agency (EPA) announced it finalized rulemaking on financial assurance requirements for the Electric Power Generation, Transmission and Distribution; Petroleum and Coal Products Manufacturing; and Chemical Manufacturing industries. The EPA determined the financial risks from facilities in these industries are addressed by existing state and federal regulations and modern industry practices, which mitigate risks inherent in these industries and cover the costs of cleaning up hazardous substance releases.
The final rulemaking relates to section 108(b) of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), more commonly known as the federal Superfund law. CERCLA establishes a comprehensive federal response and cleanup program, which authorizes the EPA to undertake removal or remedial actions in response to releases or threatened releases of hazardous substances into the environment. Section 111 of CERCLA authorizes the use of the Hazardous Substance Superfund to finance response actions undertaken by the EPA if necessary. As it relates to the final rulemaking, CERCLA also enables the EPA to require facilities to cover the financial burden of potential hazardous substance releases consistent with the degree and duration of risk associated with the production, transportation, treatment, storage or disposal of hazardous substances, by imposing financial assurance requirements that make the owners and operators of facilities prove there are funds to clean up releases, so the taxpayers are not asked to foot the bill.
The EPA also made it clear that the new rulemaking would not eliminate existing environmental regulations, but rather, the EPA will not impose new financial assurance requirements relating to these industries. The EPA stated the decision was based upon an evaluation of the history of cleanups at Superfund sites, modern industry practices, applicable federal and state regulations, the industries’ financial health and economic trends, and the EPA’s review and consideration of public comments to the proposed rulemaking. The EPA noted nothing in the final rulemaking affects, limits, or restricts the EPA’s authority to take a response action or enforcement action under CERCLA at any facility in the relevant industries, which could include imposing a requirement for financial responsibility as part of such response action, should the facts demonstrate a need for that action at an individual site.
Since the new rulemaking rolls back the financial assurance requirements imposed by the Obama administration, which pushed for the requirements to address Superfund sites orphaned by companies that go bankrupt and can no longer fund cleanups, it is anticipated that the administration of President-elect Joe Biden will seek to address the latest changes once he takes office.