Federal and State Developments

In a major upset, Donald Trump wins the Presidency last night.  In less than twenty-four hours after the official concession by Secretary Clinton, people are scrambling to figure out what a Trump Presidency really means.  Because he was purposefully silent on specifics during the General Election, many are left this morning "reading the tea leaves" to figure out what the future might hold. It is no different when it comes to the future of the EPA and environmental regulations.

Clearly, President-Elect Trump intends to reduce environmental regulation.  Just how far he plans on going has yet to be seen.  However, two of the most significant EPA regulatory actions under the Obama Administration are clearly on the chopping block-  the Clean Water Rule and Clean Power Plan.

What repeal of the Clean Water Rule will mean?

The Clean Water Rule was the Obama Administration’s attempt to extend the reach of federal jurisdiction under the Clean Water Act to most waters and wetlands.  To understand the reason for the Clean Water Rule it is important to review the long history that led to is promulgation by EPA.

The CWA limits jurisdiction to "navigable waters" which is defined as "waters of the United States, including the territorial seas." 33 U.S.C. Section 1361(7)  Interpretation of the vague term- "waters of the United States"- has been left largely to guidance and the Courts. The most significant decisions were issued by the Supreme Court in Rapanos and SWANCC. Justice Kennedy, plurality decision in Rapanos held that CWA jurisdiction extended to both navigable waters and any non-navigable water that had a "significant nexus" to a navigable waterway.  

As applied, the "significant nexus" test extends jurisdiction to small tributaries and wetlands separated from large rivers or water bodies.  Under the test, these smaller streams or wetlands fall under federal jurisdiction if impacts to the stream or wetland would affect the "chemical, physical, and the biological integrity of a navigable water."

EPA issued the Clean Water Rule in attempt to better define how the significant nexus test should be applied as well as establish which waterways were exempt from coverage.  The rule was harshly criticized as an overreach by EPA. Soon after its release, the rule was challenged by a number of states and business groups.  The Sixth Circuit Court issued a stay blocking implementation of the rule until the case could be heard.  

There is little doubt the a Trump Administration will repeal the Clean Water Rule as a significant overreach of federal jurisdiction under the Clean Water Act.  However, unless the rule is replaced with a new definition of "waters of the U.S." businesses and individuals will have no regulatory certainty.  Repeal of the rule will mean continuation of the status quo of vague guidance and litigation in the Courts over the extent of federal jurisdiction.  

What will be fascinating to see is whether a Trump Administration is simply satisfied with repeal of the Clean Water Rule or whether the Administration attempts to provide much needed regulatory certainty. One approach would be to limit federal jurisdiction under a new rule and rely on the states to determine which smaller streams or more isolated wetlands should be protected strictly under state law.  Ohio provides a good example of how this regulatory structure could work as it was one of the few states that passed a law protecting isolated wetlands after the Supreme Court decision in Rapanos.

Revoking the Clean Power Plan

It is also clear that the Obama Administration most significant regulatory action- promulgation of the Clean Power Plan- will be undone within the first 100 days of the Trump Presidency.  Years of technical and legal work by EPA went into development of the rule.  However, the rule was based on very tenuous legal grounds.  

After repeal, unlike the Clean Water Rule, there is virtually no chance the EPA under President Trump will replace the Clean Power Plan.  Furthermore, there is a very good chance additional climate change regulatory actions by EPA will be eliminated.  

However, despite those who forecast the end of all climate change related regulation, the Clean Air Act will still exist.  The Supreme Court has already decided that greenhouse gases are a "pollutant" under the Clean Air Act.  What this means is a likely a return the the Bush-era on climate change litigation- Blue States and environmental groups using the Courts to push for regulation or blocking attempts to repeal enacted regulations.  Litigation means less certainty for businesses, however, less regulation is a certainty as well.

On August 24th, Ohio EPA released new guidance that incorporates an unprecedented approach to vapor intrusion.  Under the new guidance, Recommendations Regarding Response Action Levels and Timeframes for Common Contaminants of Concern at Vapor Intrusion Sites in Ohio, the Agency is for the first time demanding immediate action when contaminant levels exceed certain established "trigger levels."  In the case of one particular contaminant, trichloroethylene (TCE), the Agency expects action within days if the associated trigger levels are exceeded.  The guidance, as outlined below, has major implications for businesses, property owners, consultants and attorneys.

The guidance establishes specific trigger levels for sub-slab and indoor air.  With regard to TCE, it establishes trigger levels for groundwater in addition to sub-slab and indoor air.  Groundwater or sub-slab exceedances will require immediate indoor air sampling.  If indoor air trigger levels are exceeded, immediate action is required in the form of installation of a remedy and/or notifying regulators.  The response times for exceedance of indoor air trigger levels are set forth below.

Response Times for Common Indoor Air Contaminants

Exceeds Indoor Air Risk Standard
Chronic Response Resample or install remedy within 3-90 days
Accelerated Response Coordinate with appropriate state, local and health authorities on response action

 

* Common contaminants include: vinyl chloride, tetrachloroethylene, chloroform, carbon tetrachloride and naphthalene

 

Response Times Specific for TCE

Exceeds Indoor Air Risk Standard
Accelerated Early and interim response actions evaluated within weeks
Urgent Response actions evaluated within days. Consider relocation of residents/occupants
Imminent Immediately contact state, local and public health officials.  Relocate residents/occupants

The Agency made the following public statement following release of the new guidance:

The Division of Environmental Response and Revitalization (DERR) has developed a memorandum on action levels and response timeframes for sites that are being investigated for vapor intrusion of trichloroethylene (TCE) and other associated chemicals. These actions levels and time frames are based primarily upon the short term exposures to TCE and the potential for cardiac malformations in developing fetuses. DERR developed this guidance in consultation with USEPA and use these risk levels and response times when conducting Ohio EPA lead investigations for the CERCLA and RCRA programs. This guidance does not have the force of law, but Ohio EPA recommends its use to outside stake holders, including the Voluntary Action Program (VAP), in evaluating the concentrations of volatile compounds in ground water, soil gas or indoor air in residences and commercial buildings.(emphasis added)

What is unprecedented about this new guidance is the requirement to take immediate action, within days in some cases, based upon risk based screening values.  Historically, vapor intrusion risks were vetted through sampling and analysis, a process that could take a year or more before cleanup was implemented.

Guidance on TCE

TCE is a very common metal degreaser.  As set forth above, the response timeframes for exceedances of TCE trigger levels are particularly aggressive.  Ohio EPA bases its urgent call to respond upon a specific evaluation of the risks of TCE exposure:

“In September, 2011, [U.S. EPA] updated the toxicity assessment for TCE which concluded, in part, that women in the first trimester of pregnancy are one of the most sensitive populations to TCE inhalation exposure due to the potential for fetal cardiac malformations. Because the key steps for cardiac development occur within the first 8 to 10 weeks of pregnancy, exposure to TCE during early pregnancy is of concern.”

To give some perspective as to the number of sites in Ohio that may have some level of TCE contamination, earlier this year, Massachusetts recently announced a TCE initiative in which it reviewed 1,000 closed cleanup sites across the State.  Ohio, a much larger and more industrial state, likely could have more TCE impacted sites. 

Implications of New Vapor Intrusion Guidance

The guidance has major implications for businesses/property owners, consultants and attorneys:

  • Property owners have increased liability risk, in particular if they are aware that trigger levels may be exceeded.
  • Through guidance and training sessions, Ohio EPA has pressured consultants to come forward with data even in instances when their clients may not want the information to be public;
  • It will be critical for attorneys to ensure adequate evaluation of vapor intrusion is included in Phase Is.  While it is a requirement to evaluate vapor intrusion risks under the current Phase I standard (ASTM 1527-13), inconsistencies persist among consultants in evaluation of vapor intrusion in their Phase I reports.
  • Where Ohio EPA has data and wants further evaluation of vapor intrusion risks, the Agency is notifying property owners they must take action or the Agency will proceed with sampling.
  • In early summer, Ohio EPA revoked portions of its prior vapor intrusion guidance that relied upon use of the Johnson & Ettinger model (a less conservative model than U.S. EPA Vapor Intrusion Screening Level (VISL) Calculator).  Ohio EPA still hasn’t been clear as to whether it will reopen previously closed cleanup sites that relied upon the Johnson & Ettinger model.
  • While the guidance states it does not have the force of law, EPA is taking action based upon the new guidance.  

 

On November 2, 2015, President Obama signed into law the Federal Civil Penalties Inflation Adjustment Improvement Act of 2015.  The law required all federal agencies to increase civil penalties with inflation. While there were previous requirements to increase civil penalties, the new law provides for more dramatic increases attributable to the following changes:

  • Requires adjustments annually instead of every four years as had been previously been required;
  • Institutes a "catch-up" period to increase penalties assuming the more accelerated schedule had previously been in place with a cap on total increases of 150% (which is quite dramatic)
  • Formula for the "catch-up" period is based on how much the October 2015 Consumer Price Index (CPI) exceeds the 1990 CPI (called the "cost-of-living multiplier")

The EPA promulgated the Civil Monetary Penalty Inflation Adjustment Rule to establish a schedule for penalty increases including implementation of the "catch up" provision.  The schedule began implementation on August 1st.  EPA described the purpose of the rule as follows:

The primary purpose of the rule is to reconcile the real value of current statutory civil penalty levels to reflect and keep pace with the levels originally set by Congress when the statutes were enacted.  

EPA’s Adjustment Rule includes the following increases (there are a range of potential penalties in the Adjustment Rule.  The ranges shown below are for some of the more common violations):

  • TSCA toxic substances violations – go from $25,000 per day to $37,000
  • RCRA-  from $25,000 per day to anywhere from $56,467 to $70,117 depending on the nature of the violation
  • Clean Air Act-  from $37,500 (set in 2009) to $44,539 for EPA administrative penalties and a maximum of $93,750 for penalties assessed by a court (the maximum increase of 150% allowed under the rule)
  • Clean Water Act- from $37,500 to anywhere from $44,539 to $51,570
  • ECPRA and CERCLA- from $37,500 to $53,907

To understand the specific penalty increases for particular violations of the statutes set forth above, consult Table 2 of 40 CFR Section19.4 of the EPA Civil Monetary Penalty Inflation Adjustments Rule.

While EPA still has discretion to seek less than the per day maximum civil penalty set forth in the Adjustment Rule, the rule shows an intent that penalties for environmental violations will be significantly larger even when EPA exercises is discretion.

On July 29th, the Michigan Attorney General Bill Schuette charged six more public officials in connection with their roles in the Flint Water Crisis.  One of the six charged included a senior management official at the Michigan Department of Environmental Quality (MDEQ)- the former Chief of the Office of Drinking Water and Municipal Assistance. The latest charges are in addition to the two MDEQ officials charged in April.  

Attorney General Schuette stated:

"Many things when tragically wrong in Flint.  Some people failed to act, others minimized harm done and arrogantly chose to ignore data.  Some intentionally altered figures and covered up significant health risks."  (emphasis added)

Ohio experienced its own issues with drinking water in Sebring Ohio.  In January, Ohio EPA fired two employees for failing to timely provide information to the District Office deemed critical to providing timely information regarding the condition of water in Sebring.  Here is what Ohio EPA’s Press Release said about the reason for terminating the employees: 

"Ohio EPA Central Office employee responsible for sending laboratory results from the Central Office failed to ensure that data was provided to the field office to help them conduct their review…The employee’s supervisor is also being terminated for not properly managing an employee who had an existing record of performance issues and not providing appropriate corrective counseling or progressive discipline despite being instructed to do so."

Ohio EPA also announced that it established a new process to provide staff with a direct and expedited communication route to senior Ohio EPA officials of situations that have possible “significant environmental and public health consequences.”

It is rare for State environmental protection agencies to fire employees for not performing their job.  It is even more rare for criminal charges to be brought against State EPA employees relating to performance of their job functions.  The firings and criminal charges have garnered national attention.  The crises have, no doubt, had an effect on the cultural and work environments of State EPA.s

Here are five things businesses can expect:

  1.  More Aggressive Deadlines-  One of the themes from Flint and Sebring was whether officials acted on information on a timely basis.  Also, whether officials raised public health issues up the chain quickly.  As a result, it is likely regulators will be demanding more aggressive deadlines for businesses to address non-compliance and/or investigate issues.
  2. Demand for Action-  Regulators will have less tolerance for debating over appropriate responses to ongoing violations and/or investigating issues.  If businesses don’t respond in a timely fashion (in the Agency’s viewpoint) or refuse to take the steps the Agency believes are appropriate, regulators will takes action.  This could be performing sampling using Agency resources (not waiting for businesses to sample).  This could be referring matters up the chain more quickly for enforcement.  
  3. Less Deference to Outside Technical Consultants–  Regulators will be less willing to defer to the private sector to decide how to appropriately respond.  Historically, it was common place for private consultants and agency representatives to debate technical issues.  With the pressure on agency employees to perform their duties quickly this will likely translate to less deference to private consultants.
  4. More Involvement of Management in Decision Making-  Another theme from both Flint and Sebring was whether agency employees made management aware of issues in a timely fashion.  For example, Ohio EPA announced a new protocol for making senior management aware of "public health" issues quickly.  What constitutes a public health issue or  potential issue is vague.  Lower level employees will be more inclined to raise issues up chain of command to management.  In some cases, even directing businesses to address correspondence directly to senior management when that same correspondence would have gone to staff just a year ago.
  5. Changing Work Environments-  Even though environmental regulators perform a critical function, the stereotype is that government workers have less stress and more reasonable work hours then their counterparts in the private sector. With the added pressure and spotlight these recent news events have brought, there will be changes in the work environment within State EPAs.  These "cultural" changes will also be felt by businesses, consultants and individuals that interact with regulators. 

Guest Post from Arun Kottha and Christopher Caryl at Tucker Ellis.

On June 22, President Obama signed into law the Frank R. Lautenberg Chemical Safety for the 21st Century Act, which amends the Toxic Substance Control Act (TSCA), the nation’s primary chemical management legislation. TSCA was originally enacted in 1976 and is administered by the United States Environmental Protection Agency (EPA). One of the main objectives of the TSCA was to assess and regulate new commercial chemicals before they enter the market. When TSCA was originally enacted, all then-existing chemicals were considered safe for use and were “grandfathered” in. Under the 1976 law, tens of thousands of chemicals already in existence in 1976 were considered in compliance without any requirement for the EPA to review them for safety.

The 2016 amendment makes several significant changes to the existing law, including risk assessment and management of all chemicals in commerce (not just new ones), additional tools to prevent new chemicals from entering the market, changes to claims of proprietary information, and guaranteed funding of the new program. These amendments require the EPA to assess numerous chemicals previously deemed “safe” and signal a shift toward heavier regulation of the chemical industry.

RISK ASSESSMENT

The EPA is required to evaluate the safety of existing chemicals in interstate commerce and to start with those most likely to cause health risks. So-called “high-priority” chemicals must be assessed by the EPA starting with 10 assessments to be under way within 180 days, and 20 at any given time to be under way within a few years. Low-priority chemicals need not be tested but can be moved into high-priority with the development of additional hazard information. The initial assessment is a new risk-based safety standard that considers if the chemical poses an “unreasonable risk,” especially to susceptible or highly exposed populations (like children, the elderly, and industry workers), irrespective of cost. If there is an “unreasonable risk” identified, cost may be then considered in the mitigation of the health risks, along with bans, phase outs, or other actions.

INCREASED SCRUTINY OF NEW CHEMICALS

New chemicals may also have a tougher time getting to market. Under the 1976 law, companies would notify the EPA of their intention to manufacture a new chemical or a significant new use for the chemical by using a Pre-Manufacturing Notice (PMN). The 1976 act did not require any toxicity testing before submitting a PMN and did not require safety information to be included with the documentation. Under the 1976 law, in order to regulate new chemicals, the EPA needed to make a determination that the chemical might present “an unreasonable risk to human health or the environment…” If it could not satisfy this requirement within a narrow window of 90 days, the chemical was allowed to be legally marketed and sold. Now, the EPA must make an affirmative finding on the safety of a new chemical or significant new use of an existing chemical before it is allowed into the marketplace. While this may be a win for health and safety advocates, it may cause a significant backlog and therefore impede business and innovative progress.

PROPRIETARY INFORMATION AND FUNDING

The amendment also limits claims of confidentiality by chemical manufacturers with a rebuttable presumption that “the public interest in the disclosure of the information outweighs the public or proprietary interest” of the manufacturer. And finally, the EPA will be able to collect up to $25 million per year in user fees from chemical manufacturers and processors, supplemented by congressional budgeting to pay for these expanded regulatory activities. 

EFFECT

The EPA may renew its previously unsuccessful effort to completely ban the use of asbestos. EPA Administrator Gina McCarthy states in her blog, “The dangers of inaction were never more stark than in the case of asbestos, a chemical known to cause cancer through decades of research.” McCarthy goes on to write that “[d]uring the first Bush Administration, EPA tried to ban asbestos under TSCA, but the rule was overturned in court. In the law’s 40-year history, only a handful of the tens of thousands of chemicals on the market when the law passed have ever been reviewed for health impacts, and only 5 have ever been banned.”

This amendment may cause turmoil in the chemical industry with the assessment, for the first time, of decades-old chemicals that previously were deemed “safe.” In the next six months, we will know which high priority chemicals are selected for the initial risk assessment. The bill can be found here.
 

Vapor intrusion is the process where contamination in soil and groundwater volatilizes and enters indoor air in buildings.  Understanding and evaluating the risks to occupants of buildings with vapor intrusion issues has received dramatic new focus nationally in recent years.

In Ohio, scrutiny of vapor intrusion issues is at an all time high.  This post details some of the recent significant initiatives and actions taken by Ohio EPA to address vapor intrusion.

Ohio EPA Revokes 2010 Vapor Intrusion Guidance

On May 27, 2016, Ohio EPA announced that it was revoking prior guidance in place since 2010 on analyzing the risks associated with vapor intrusion.  Ohio EPA revoked two entire chapters of its 2010 vapor intrusion guidance document.  It also indicated that environmental consultants should utilize U.S. EPA’s guidance document titled, “Technical Guide for Assessing and Mitigating the Vapor Intrusion Pathway from Subsurface Vapor Sources to Indoor Air (June 2015)” and U.S. EPA’s Vapor Intrusion Screening Level (VISL) calculator.

The VISL calculator is a new tool utilized by U.S. EPA to quickly determine whether a site presents a potentially unacceptable health risks due to vapor intrusion.  Using the VISL, soil gas, soil and groundwater sample results are plugged into the calculator to determine if risk presented by the detected contaminant levels exceed screening levels.  If screening levels are exceeded, the Agency can require either more investigation or cleanup.

The VISL replaces prior modeling techniques that have been utilized for years to evaluate contaminated properties.  Ohio EPA’s 2010 Vapor Intrusion Guidance document relied heavily on the Johnson & Ettinger (J&E) model to analyze risk.  J&E was used to evaluate vapor intrusion at hundreds of site in Ohio.

Some consultants tell me that the VISL is approximately 50 times more conservative than the J&E model.  As a result, site contamination issues previously thought to present no issues under J&E are now viewed as significant problems under VISL.

Ohio EPA’s revocation of portions of its 2010 vapor intrusion guidance includes the chapters regarding the J&E model.  Ohio EPA’s announcement included a statement that all sites currently being evaluated will no longer consider J&E data valid and will require use of the VISL.

Ohio EPA Reviews TCE Site Inventory

Ohio EPA has also decided to heavily scrutinize any site with trichloroethylene (TCE) contamination (typically associated with a solvent used to clean metal parts).  A new study determined that the risk presented by exposure to TCE contamination to woman of child bearing years and pregnant women are greater than previously thought.  Those risks are also thought to be acute risks (i.e. short term) versus the long term risk based upon 30 years of exposure used to develop many cleanup standards.  

Beginning in the later part of 2015 and continuing through today, Ohio EPA has been internally evaluating any site where it has data showing TCE contamination.  Those sites are being analyzed using the new TCE cleanup standards and the VISL calculator.  Due to the fact both the cleanup standard and VISL are more conservative, sites are much more likely to be deemed to present potential health issues.  

Ohio EPA has sent letters to owners of sites with TCE contamination requesting additional investigation or cleanup.  In some cases, Ohio EPA has demanded additional testing and if the property owner refused, Ohio EPA performed its own sampling.

In February 2012, at an Ohio EPA brownfield training course, environmental consultants were told of Ohio EPA’s position regarding vapor intrusion and TCE.  Here are some of the key points discussed:

  • Ohio EPA will not "sit on data" if it believes an issue exists it will move quickly to seek or take additional action;
  • In terms of sampling techniques to evaluate vapor intrusion, Ohio EPA wants to see sub-slab paired with indoor air samples to analyze the risk;
  • In analyzing vapor intrusion, Ohio EPA will want multiple sample locations and multiple sampling events (to address seasonal variation in contaminant levels);
  • If off-property vapor intrusion needs to be analyzed, the Agency’s expectation is the owner/developer will do it.  In not, the Agency will collect the data it needs;
  • Agency is not going to have long technical debates whether a health issue may exist.  If the Agency thinks there may be an issue it wants to act quickly;
  • On Voluntary Action Program (VAP) cleanups, if a consultant is aware of data that indicates a potential health issue, the Agency expects the consultant to come forward with the information even if the property owner or developer doesn’t want the information released to the Agency;
  • Due to TCE’s short term risks to sensitive populations, the Agency expects quick action and evaluation of data at sites where TCE is at issue.

At the Spring 2016 Ohio Brownfield Conference many of these points were reiterated by Agency representatives.  In particular, participants were told the Agency will act quickly and aggressively when it believes contamination has the potential to present a public health issue.  

Ramifications to Property Owners and Developers

The changes relative to analysis of vapor intrusion in general as well as the specific initiative on sites with TCE, has major ramifications for property owners and developers.  Here are some the issues or considerations for owners/developers:

  • Consultants are under increasing pressure to disclose any data to Ohio EPA that suggests a public health issue may exist;
  • Expectation is that properties with potential vapor intrusion issues on or off site will be evaluated very quickly;
  • The standards and models use to analyze vapor intrusion risk have become significantly more conservative.  Sites are much more likely to be deemed to present potential issues than even a year ago; 
  • All ASTM compliant Phase I reports are supposed to evaluate the potential for vapor intrusion.  In light of the increased focus on vapor intrusion, it is critically important to conduct high quality due diligence prior to acquisition that includes a robust evaluation of the potential for vapor intrusion; 
  • Liability risks have increased dramatically in recent years for owners and/or developers of property that may have vapor intrusion issues; and
  • Due to increased stringency of modeling and cleanup standards, what will the Agency do regarding sites that were previously deemed sufficiently cleaned up under outdated guidance and cleanup standards?

 

On February 28, 2016, U.S. EPA publicly announced its priority enforcement areas (EPA National Enforcement Initiatives or NEIs) for the next three years (fiscal years 2017-2019).  The announcement provides keen insight into how EPA plans to allocate its enforcement resources in the coming years.  

 EPA describes the NEIs in the following manner:

"Every three years, EPA selects National Enforcement Initiatives to focus resources on national environmental problems where there is significant non-compliance with laws, and where federal enforcement efforts can make a difference"

EPA has elected to keep five of its current enforcement initiatives, expanding some of its efforts, as well as add two new initiatives.  This brings the total priorities to seven for fiscal years 2017-2019.  The NEIs take effect on October 1, 2016. 

A brief summary of each NEI is provided below.

Air

  • Reducing Air Pollution form the Largest Sources-  EPA’s New Source Review (NSR) initiative has targeted cement, glass and acid plants.  However, its principal target has been coal fired power plants.  According to U.S. EPA statistics, from FY 2010 to FY 2015, of the 800 facilities inspected, EPA has increased the number of facilities with enhanced air pollution controls from 41% to 77%.  By maintaining this enforcement priority, EPA will likely focus on compliance with existing decrees as well as target new industries.
  • Cutting Hazardous Air Pollutants – EPA is expanding this initiative for the FY 2017-2019 to focus its efforts on two additional source categories-
    • Large product storage tanks used by refineries,chemical plants and bulk storage facilities- EPA will likely used enhanced inspection techniques, such as infrared cameras to looks for leaks of volatile organic compounds (VOCs) from these storage units;
    • Hazardous waste generator and treatment, storage, and disposal facilities-  the focus of this expanded initiative will be to address hazardous waste tanks, surface impoundments, or containers, as well as related hazardous waste treatment equipment.

Energy Extraction

  • Ensuring Energy Extraction Activities Comply with Environmental Laws

The attached chart shows the dramatic increase in the number of inspections and enforcement actions related to energy extraction.  

EPA has increased the number of inspections from 361 in FY 2011 to between 600 to 700 per year.  Interestingly, the number of enforcement actions has not significantly increased when comparing FY 2011 to subsequent years. 

It is also interesting that EPA maintained this initiative despite the recent dramatic economic downturn in the energy sector.

  

Hazardous Chemicals

  • Reducing Pollution from Mineral Processing Operations- Focus is on releases from mining operations that EPA believes threaten drinking water, surface water as well as cleanup mining sites.
  • Reducing Risks of Accidental Releases at Industrial and Chemical Facilities (NEW)-  The focus of this new initiative will be compliance with Risk Management Plan (RMP) rule.  RMPs are required for facilities that store extremely hazardous materials.  RMP is required under Section 112(r) of the Clean Air Act.  Facilities are required to have plans that inventory the materials and have a plan to implement in the event of releases or emergencies.  Plans are required to be updated every five years. It is likely EPA will look for facilities that have failed to comply with the RMP rule or those facilities with outdated plans.

Water

  • Keeping Raw Sewage and Contaminated Stormwater Out of Our Nation’s Water-  EPA has largely addressed municipal wastewater treatment plants (WWTPs) with combined sewer overflows (CSOs) and/or sanitary sewer overflows (SSOs).  This initiative was renewed most likely to focus on compliance with existing consent decrees.  In many cases, cities are facing the most expensive parts of their compliance schedules.
  • Preventing Animal Waste from Contaminating Surface and Ground Water- EPA has been focused on inspections and enforcement of Combined Animal Feeding Operations (CAFOs) for a number of years.  Since 2011 it has conducted over 1,800 inspections and concluded 217 enforcement actions under the Clean Water Act.
  • Keeping Industrial Pollutants Out of the Nation’s Waters (NEW)-  EPA will be focusing on certain industries that it believes contribute a larger portion of nutrient and metal pollution. Those industries include chemical and metal manufacturing, mining and food processing.  On its web-page, EPA signals that it will look to compliance with NPDES permits and electronic reporting of effluent violations (eDMRs) to initiate actions.

The Clean Power Plan and Waters of the U.S. Rule have dominated much of the discussion at the ABA’s Spring Meeting of the Section of the Environment, Energy and Resources (SEER) in Chicago.  SEER is a gathering of nations prominent environmental and energy attorneys from both the private sector and government.

Waters of the U.S. Rule (WOTUS)

The WOTUS rule defines the jurisdiction of the Clean Water Act.  WOTUS was issued after the Supreme Court suggested in the Rapanos decision that the regulated community would benefit from a rule.  EPA released the rule earlier this summer.  As previously discussed in a prior post, the Sixth Circuit has issued a stay of the EPA’s WOTUS rule after numerous lawsuits have been filed.  

Steven Neugeboren, Associate General Counsel, Water Law Office, U.S. EPA, discussed the Agency’s development of the rule.  He emphasized that the Administrator’s directive in developing WOTUS was to "follow the science."   He opined that part of the reason for all of the litigation and controversy surrounding the rule is based upon "speculation" and "fear" fostered by some in the regulated community regarding the scope of the rule.  

As an example, Mr. Neugeboren cited to public comments on the draft of the rule that argued EPA was trying to regulate puddles.  EPA responded by putting specifically in the final rule that puddles are exempt form regulation.  In response, he indicated some commented that the inclusion of the exemption was an indication EPA planned to regulate puddles all along.

Comments on the private bar during the conference have centered on the broad scope of the rule. EPA’s approach in the rule was described as extending regulation to virtually every waterway and relying upon narrow exemptions to carve out instances EPA deems regulations unnecessary.  Due to the broad and vague language used in WOTUS there is tremendous uncertainty as exactly what is covered under the rule.

Are Wetland/Stream JD’s Appeallable?  The Supreme Court Will Decide

As a first step in wetland/stream permitting, many developers and property owners will hire a consultant to perform a wetland and/or stream delineation on the property. The delineation is the consultant’s opinion as to whether federally protected wetlands or streams exist on the property. The delineation will also determine the size and quality of the water resources on the property. However, the consultant’s delineation is not a legal determination. Only the Army Corps of Engineers (ACOE) can determine if wetland or streams are federally protected. Therefore, although not required, many property owners/developers submit their wetland delineations to the ACOE for concurrence. This is called a "Jurisdictional Determination" or JD. See, 33 CFR 320.1(a)6)

The Eighth Circuit Court of Appeals determined that an approved jurisdictional determination (JD) is a final agency action that can be challenged. See, Hawkes Co., Inc. et al v. Corps, Case No. 13-3067 (April 10, 2015).  The Court determined that if a JD is not appeallable a property owner is left with the Hobson choice of risking enforcement or acquiescing to the ACOE permitting process.

At the conference, a panel discussed the likelihood the the Hawkes case would be heard by the U.S. Supreme Court.  Because there has been a split in the circuits, the panelists all believed the case would likely be heard.  

Panelist Ray Ludwiszewski, attorney at Gibson, Dunn & Crutcher, offered his opinion that while the case would be heard, he believed the Court would determine a JD is not appeallable because JDs are voluntary.  He distinguished JDs to the enforcement order that was issued by EPA in the Sackett case which compelled the property owner to comply.  

Professor Richard Lazarus, Harvard, agreed that the voluntary nature of JDs may be a key factor in how the Court would rule, but he said the Court may rule JDs are appeallable because the Court, in prior decisions like Sackett, showed its "anger" over the EPA’s application of the 404 wetland/stream permitting and the "heavy handed nature of government regulation" in this area.

Clean Power Plan

Not surprisingly, EPA strongly defended the legality of the rule at the conference while attorneys from the private sector questioned its legal foundation.  The biggest open issue regarding the legality of the Clean Power Plan was the scope of Section 111(D) of the Clean Air Act.   Conference participants agreed the key issue is whether EPA’s authority Section 111(D) is limited to the "fence line" at a power plant or provides much broader authority to regulate the mix of energy (coal, natural gas and renewables) across the country.

Another issue discussed was the uncertainty caused by litigation  The States must file their plans to comply (referred to as a "State Implementation Plan" or "SIP") by September 2016.  The rule allows incentives to State’s to file SIPs.  For example, states can get more time to develop their plans and cannot participate in a emission trading plan if they don’t submit a compliance plan. Despite the incentives, states that strongly oppose the rule may elect to not file a compliance plan.  

Art Harrington, attorney from Godfrey & Kahn, discussed the uncertainty the rule is causing in his State of Wisconsin.  The implementation time lines and requirements, especially with the cloud of litigation, is causing tremendous uncertainty in the regulated community.  

Monica Trauzzi, reporter for E&ETV/E&E Publishing, commented that in her discussions with Governors and State agency air directors, the states are having conversations around development of compliance plans.   Conversations are occurring even in states strongly opposed to the plan because the utility industry has been putting pressure on states due to the uncertainty associated with failing to comply with the plan.

 

Over the last decade, Ohio EPA has attempted to promulgate beneficial reuse rules a number of times. Each time the rules have been released for public comment the proposals have been met with significant criticism and the proposals never moved forward.

The crux of the issue is that Ohio lacks a defined regulatory program for recycling or reuse of certain industrial byproducts such as: spent non-toxic sand, dredgings, fly ash, bottom ash, slag, etc.  Right now any person who wants to recycle or reuse these materials can either move forward and risk Ohio EPA enforcement or seek an adhoc regulatory approval from Ohio EPA.

In a prior post from 2012, I discussed the history behind the beneficial use rules.  This is a summary from my prior post:

From 1994 until the early 2000’s, Ohio EPA regulated these materials under Policy 400.007 "Beneficial Use of Non-Toxic Bottom Ash, Fly Ash and Spent Foundry Sand, and Other Exempt Waste." The policy was revoked after legal challenge was raised to EPA’s authority to regulate through policy. Since revocation of Policy 400.007, Ohio EPA has not had clear guidelines for reuse of these materials.

Revocation of the policy left a regulatory vacuum. Some industry representatives take the position that the industrial materials are unregulated because Ohio EPA has not established rules. Ohio EPA takes the legal position that this material is regulated as a waste under R.C. 6111 [or as a solid waste under R.C. 3734]. Ohio EPA asserts that companies need authorizations from the Division of Surface Water [or Division of Materials and Waste Management] in order to be deemed protective of water resources.

Currently, the Agency reviews beneficial use proposals either under its current Integrated Alternative Waste Management Program (IAWMP) or Land Application Management Program (LAMP)(click here for information on both programs).  Both amount to basically permits.  However, neither program has defined standards for sampling of material prior to reuse nor are there specific regulatory standards for approving uses.  More importantly, each proposed use requires its own separate IAWMP or LAMP approval.

Split Among Industries

One of the biggest challenges Ohio EPA has faced in promulgating beneficial use rules has been a split within industry groups as to the perceived need for rules.  Some industries, such as the Steel Industry, has taken the position that they do not need a regulatory approval from Ohio EPA for beneficial reuse projects involving byproducts such as slag.  These industries have strongly opposed rules for these materials.

Other industries, such as foundries, have been very supportive of rules in order to provide regulatory certainty.  These industries believe the reuse/recycle market will grow substantially if the threat of Ohio EPA enforcement is removed through rules and permits that approve uses.

Ohio EPA’s latest rule package attempts to address this split within industry by specifying the rules would apply to only specific industrial byproducts and materials:  foundry sand, water treatment residuals, waste uses as a fuel, and dredged material (i.e. sediment).

Proposal Avoids the Issue of Standards

One of the biggest issues with developing a beneficial reuse program in Ohio has been the standards imposed for approving projects.  Ohio EPA has traditionally been much more conservative than industry in identifying standards for approvals.  Industry has been harshly critical of Ohio EPA’s proposed standards as overly conservative leading to little use of the program. This debate has delayed the rules for a number of years.

In an attempt to avoid this controversy, Ohio EPA’s latest proposal does not identify a specific standard that will be used in reviewing projects.  Rather, the proposal simply references various options the Agency could use to evaluate proposals, including:

Public Comment Period Open on Latest Proposal

On May 14th, Ohio EPA released its latest proposed draft rules for public comment.  The public comment period is open until June 22nd.  

A complete listing of the draft rules and the business impact analysis is provided on Ohio EPA’s webpage (click here).  On June 10, 2015, Ohio EPA conducted an Early Stakeholder Outreach in which it made a formal presentation regarding the rules (click here for access to Ohio EPA’s powerpoint presentation).  The presentation provided a simple comparison to Ohio EPA’s previous proposed rule package with very little discussion of the substantive elements of the rules.

Draft Rules- An Approval Process with Little Regulatory Certainty

It appears the Agency’s latest attempt at rules main purpose is to set up a defined mechanism for regulatory approvals for recycling/reuse:

  1. Pre-Approved Uses- Certain uses that are allowed so long as they meet specifications and requirements set forth in rule.  There are very few pre-approved uses in the proposal.  These include: incorporation into construction materials such as concrete or use as a fuel.
  2. General Permits-  The next step would be for Ohio EPA to release general permits that would cover large categories of reuse.  [Two example beneficial reuse general permits are still on Ohio EPA’s webpage- specific uses of foundry sand and alum sludge in topsoil]
  3. Individual Permits-  Any proposal that doesn’t fall within either a pre-approved use or general permit would need an individual permit.  To obtain an individual permit the permittee would need to supply additional sampling and technical justification for its proposal.

While the regulatory approval process may be defined, the rules provide little certainty with regard to the more challenging issues such as:

  • How much sampling is requires to demonstrate the levels of contamination in the material;
  • How much sampling will be required once the project is completed;
  • What standards will be used to approve the proposed use (RSLs, VAP, etc.);
  • What conditions and/or limitations will be incorporated into general permits or individual permits

Ohio EPA asserts these main issues are left vague to provide regulatory flexibility.  However, the proposal sacrifices regulatory certainty for flexibility.  The proposal is simply delaying the bigger fights until after the rules are in place.

We know that U.S. EPA budget is tight.  Maybe that is why they are looking for new and innovative ways to reduce their work load.  This is evident in the memorandum released on January 7, 2015 by EPA’s Office of Enforcement and Compliance Assurance.

The memorandum is titled "Use of Next Generation Compliance Tools in Civil Enforcement Settlements." In the memo, U.S. EPA Assistant Administrator Cynthia Giles discusses use of advances in pollutant monitoring and information technology to "increase compliance with environmental regulations."  

Third Party Verification

One the the tools U.S. EPA recommends in its memorandum is the incorporation of "independent third party verification" into settlement agreements.  The concept is that an outside firm would be identified in the settlement to monitor a companies compliance with the injunctive relief portion of the settlement.  

U.S. EPA notes that the verifier must be truly independent.  It cannot be an environmental consultant who provides a report to the company before it supplies the compliance review report to U.S. EPA.  The verifier will have to certified as independent.  

The Agency notes that use of third party verifiers may be especially valuable in situations where the injunctive relief has a lengthy and/or complex compliance schedule. While the memo doesn’t discuss it, I’m certain the expectation is that the company will pay for the third party verification costs.  

Other Advanced Compliance Techniques

Other tools discussed in the memorandum include:

  • Advanced monitoring- Examples include monitoring techniques that are "not yet in widespread use," or less expensive, easier to use or mobile monitoring techniques. 
  • Electronic reporting-  A company would set up a system whereby it would electronically submit required reports and data in a searchable format.  EPA makes clear electronic reporting doesn’t mean just e-mailing the report to a U.S. EPA Regional Office.
  • Public accountability through increased transparency of compliance data-  The memo encourages companies to display compliance status on their webpage, via a mailer or on the Enforcement and Compliance History Online database (ECHO).  The idea is wider dissemination of compliance data will allow the public to monitor and notify U.S. EPA if a company is not meeting its commitments.

Conclusion

While EPA states this strategic initiative is designed to increase compliance.  The reality is that U.S. EPA doesn’t have the staff to keep up with its ever increasing workload.  The U.S. EPA wants to use monitoring equipment, the public and third parties as another set of eyes to monitor compliance. The additional costs for all of these new techniques will almost certainly be placed upon the settling party.