U.S. EPA Identifies Additional Industries for Possible Financial Responsibility
Posted: January 9th, 2010Author: All4 Staff
On January 6, 2010, U.S. EPA published an advanced notice of proposed rulemaking (ANPRM) in the Federal Register that identifies additional classes of facilities within three (3) industries for which it plans to develop proposed requirements for financial responsibility under Section 108(b) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The classes of facilities identified are in the Chemical Manufacturing industry (NAICS 325), the Petroleum and Coal Products Manufacturing industry (NAICS 324), and the Electric Power Generation, Transmission, and Distribution industries (NAICS 2211). In addition, U.S. EPA identifies the Waste Management and Services industry, the Wood Products Manufacturing industry, the Fabricated Metal Product Manufacturing industry, the Electronics and Electrical Equipment Manufacturing industry, and facilities engaged in the recycling of materials containing hazardous substances for further study before deciding to develop financial responsibility regulations for facilities within these industries.
The ANPRM is not, by itself, a rule and does not propose or establish any requirements or obligations on any facilities. U.S. EPA will examine the activities, practices, and processes involving hazardous substances at these facilities and other relevant information to evaluate the risks posed and determine whether financial requirements under Section 108(b) of CERCLA would reduce those risks. Any financial responsibility regulations developed as a result of this analysis would be proposed in the Federal Register for public comment, and finalization of any proposed regulations would be needed before any facilities would be subject to the requirements.
For purposes of this ANPRM, U.S. EPA defines facilities within the Chemical Manufacturing industry as those involved in the transformation of organic or inorganic raw materials by a chemical process and in the formulation of products. The facilities within the Petroleum and Coal Products Manufacturing industry are defined as facilities that transform crude petroleum and coal into usable products (e.g., gasoline, diesel fuel, asphalt base and coatings, heating oil, kerosene, and liquefied petroleum gas). The facilities within the Electric Power Generation, Transmission, and Distribution industry are defined as establishments that may generate electric energy, operate transmission systems that convey the electricity to the distribution system, and/or operate distribution systems that distribute electric power to consumers.
Section 108(b) of CERCLA states that the level of financial responsibility shall be established “to protect against a level of risk which the President in his discretion believes is appropriate…” To select the classes of facilities for the ANPRM, U.S. EPA used information on facilities from the National Priorities List (NPL), data on hazardous waste generation from the 2007 Resource Conservation and Recovery Act (RCRA) Biennial Report, and data from the Toxics Release Inventory (TRI). Factors that U.S. EPA considered in its analysis include the amounts and toxicity of hazardous substances released to the environment, the existence and proximity of receptors, historic contamination from facilities and whether the causes of this contamination still exist, experiences and projected costs of Federal clean-up programs, and corporate structures and bankruptcy potential.
Any new financial responsibility regulations proposed and finalized as a result of U.S. EPA’s analysis would require facilities to establish and maintain evidence of financial responsibility consistent with requirements intended to determine the degree and duration of risk associated with the production, transportation, treatment, storage, or disposal of hazardous substances. Facilities must demonstrate their financial responsibility by one, or any combination, of the following: insurance, guarantee, surety bond, letter of credit, or qualification as a self-insurer. Facilities may not have to post the final total amount of financial responsibility required all at once, but may be allowed to do it incrementally with annual increases over a period of no more than four (4) years. The level of financial responsibility is also adjusted annually, as appropriate.
The need to estimate and demonstrate financial responsibility would impact a company’s balance sheet and cost of doing business. Facilities within the industries identified by U.S. EPA in this ANPRM should watch closely for additional information that will provide opportunity to participate in the rule development process, comment on proposed regulations, and ultimately prepare for any final financial responsibility requirements that become applicable.