When Too Much Is Too Much: EPA Declines Further Regulation Over Chemical Manufacturers

The Environmental Protection Agency (EPA) Administrator, Andrew Wheeler, signed a proposed rule under Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) to not impose financial responsibility requirements for facilities in the chemical manufacturing industry on Feb. 10, 2020. A number of environmental advocacy groups spurred this action in August 2014 when they filed a writ of mandamus in the U.S. Court of Appeals for the District of Columbia Circuit, seeking financial responsibility rules in this industry and others.

Section 108(b) of CERCLA addresses the promulgation of regulations that require classes of 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. The proposed action here, Financial responsibility requirements under CERCLA Section 108(b) for classes of facilities in the chemical manufacturing industry, was provided in a pre-publication version, the official version being forthcoming in the Federal Register.

The basis for the proposed rule is that the EPA has found that the degree and duration of risk to the Superfund posed by this industry does not warrant financial responsibility requirements, as modern industry practices and existing federal and state regulations are effective at preventing risk. In developing the proposed action here, the EPA analyzed the history of Superfund cleanups (which indicated limited impact to the taxpayer under the current regulatory framework), modern industry practices, applicable regulations—both federal and state, and the risk of taxpayer funded cleanups. It also looked at the industry’s economic trends and the financial health of the sector, which indicated healthy financial performance the EPA found the industry to be in a stable financial position and able to pay off short-term obligations.  This analysis suggested to EPA that further potentially duplicative, burdensome requirements are not warranted.

The current state of affairs, the EPA said, “address the financial risk of the government having to fund cleanups from operating chemical manufacturing facilities…” EPA found that the existing monitoring and operation standards “have consistently worked over time to decrease risks in the industry…” It is important to note that the proposed action does not eliminate existing environmental requirements (which are contained in RCRA, TSCA, CAA, CWA, SDWA, and state law, among others). It also does not affect EPA’s authority to take appropriate action under various other environmental regulations that might apply to individual facilities.

The EPA had previously announced in December 2019 a similar proposal—based on the same rationale—for the petroleum and coal products manufacturing industry, and one in July 2019 for the electric power generation, transmission and distribution industry, i.e., to not issue financial responsibility requirements for these industries.  EPA’s interpretation of CERCLA here was previously upheld by the D.C. Circuit in the context of hardrock mining.