Superfund Financial Assurance Rules: Chemical, Coal, Petroleum & Electric Power Industries Face Upcoming US EPA Rulemaking

On December 1, 2016, the US EPA Administrator signed two documents about financial assurance – effectively bonding for facility cleanup – under Superfund for several industry sectors. The longer document with the shorter deadline concerned the hard rock mining and mineral processing industries, proposing specific costly rules, on which comments are due around March 13.  As previously reported, US EPA had agreed to promulgate financial assurance rules for hard rock mining companies by December 1, 2017.

The other, shorter notice signed that day affects much more of the economy, because it announced US EPA’s decision to proposed financial assurance rules under Superfund for much larger sectors of the economy:

  • Chemical manufacturing
  • Petroleum and coal products
  • Electric power generation, transmission and distribution

The notice, finally published on January 11, 2017, sets a schedule by which these rules will be published, a schedule dictated by court order. 82 Fed. Reg. 3512 (Jan. 11, 2017). Thus, while the new administration will certainly have much to say about the content of such rules, the timing of their proposal and the timing of final decisions about them are unlikely to change. Consequently, it would be a serious mistake for affected stakeholders to think that the change in administration means that these rules will not be proposed.

Given that reality, stakeholders will be well served to follow US EPA’s pre-proposal work closely, as well as the development of the rule for hard rock mining and mineral processing. While US EPA is clear that the mining rule is not necessarily the template for other industries, many common issues are likely to be settled in that first rulemaking.

Successor Local Authorities May Be Liable Under the UK Contaminated Land Regime

The recent decision of the High Court in Price and Hardwicke v Powys County Council determined that a local authority may acquire potential liability under the contaminated land regime (“CLR”) from its statutory predecessor, notwithstanding that the CLR did not enter into force until over 5 years after the transfer of liabilities took place. Continue Reading

UK Environmental Audit Committee Calls For Brexit Environmental Protection Law

The UK Environmental Audit Committee (a cross-party parliamentary select committee which considers how well government policies and programmes contribute to environmental protection and sustainable development) has published its report on “The Future of the Natural Environment after the EU Referendum”.  The report makes a series of recommendations for actions that the Government should take during the Brexit process to avoid weakening levels of environmental protection after Britain leaves the EU.

The key recommendation is that a new Environmental Protection Act must be put forward during the Article 50 negotiation period, to provide an equivalent or better level of environmental protection to that which is currently in place. The Committee sees this as a pre-requisite to ensure the Government meets its manifesto pledge to “be the first generation to leave the environment in a better state than it found it”.

Without such an Act, the Committee warns of difficulties of transposing some EU environmental legislation into UK law, and the risk of so called “zombie legislation”, where EU law that has already been transposed into UK domestic legislation ceases to be updated and can easily be eroded by statutory instruments with limited parliamentary scrutiny. The fear is that the Great Repeal Bill may seek to maintain the status quo initially, but without additional safeguards, standards of environmental legislation could more easily be eroded in future.

The environment secretary Andrea Leadsom has previously acknowledged that up to a third of the existing body of EU environmental legislation cannot readily be transposed into UK domestic law because of technical issues, and that work will be needed to make them work once Britain leaves the EU. The Committee urges the Government to identify this legislation before Article 50 is triggered to ensure full public and parliamentary debate and scrutiny of how this should be dealt with.

The other recommendations of the Committee’s report focus on replacement of existing EU environmental funding and future allocation of funding; links between Brexit and the two 25-year plans that the Department for Environment, Food and Rural Affairs (DEFRA) is due to be issuing this year (on the natural environment, and on food, farming and fisheries); the impact of trade agreements on the environment and agriculture; and establishing the objectives and governance model for future land management payments.

This report is the first in a series of inquiries to be carried out by this Committee in relation to Brexit. The next one, on “The Future of Chemicals Regulation after the EU Referendum”, has just been launched, and the Committee is inviting submissions on a range of questions on this issue.  The deadline for submissions is 6 pm on Friday 20 January 2017.

Asbestos-Containing Materials: A Non-Scope Consideration Worth Investigating During Environmental Due Diligence

A common question that arises when performing environmental due diligence on commercial real estate is the degree to which the presence of asbestos-containing materials (ACMs) should be investigated.  In the case of ACMs, “what you don’t know can hurt you” and, therefore, the old axiom of “less is more” does not apply.  This is especially true regarding asbestos not only in terms of health risks, but also from a regulatory perspective where parties can be held “strictly” liable without regard to knowledge or intent.

Those who regularly deal in commercial real estate are likely familiar with the need to obtain a Phase I Environmental Site Assessment, which is designed to identify the presence or likely presence of a release of hazardous substances and petroleum products on a commercial property.   A valid Phase I is a prerequisite to qualifying for certain protections from liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA).  Even though asbestos is a hazardous substance, it is generally not investigated in a Phase I largely because Section 104(a)(3) of CERCLA exempts ACMs as “building materials” when incorporated as part of the structure, or as a “naturally occurring substance” at a property.  While there may be unique scenarios where an environmental professional will call out the presence of ACMs in a Phase I–such as former asbestos manufacturing sites or where ACMs were disposed of–the consultant will generally not investigate ACMs incorporated into structures on the property as part of routine due diligence.

Instead, investigation into the presence of ACMs is a “non-scope consideration” under ASTM Standard Practice E1527-13, which is a class of issues that are not required to be considered in the Phase I ESA (but can be included in the Phase I for an additional fee).  Even where these services are requested, attention should be paid to how the environmental professional assesses ACM issues.  Some consultants may only “screen” for suspect ACMs based upon the date of construction occurring after certain federal bans were implemented in the 1970s.  However, unlike the bright-line ban in 1978 on the use of lead-based paint, the asbestos bans are more nuanced and prohibit only certain products and applications, such as some qualifying pipe insulation and spray on surfacing ACMs.  ACMs continue to be manufactured and used extensively in building materials to this day, including (but not limited to) vinyl flooring, pipeline wrap, and roofing materials.  While screening may offer a generalized risk profile for a property, it will not provide insight into specific risks.  If an assessment of specific asbestos risks is needed for a property (for instance, where invasive renovations are planned), an asbestos survey by an accredited asbestos specialist is the best and only means to achieve this.

Moreover, if a renovation or demolition project is planned for the property, a survey is required prior to any activities that would impact ACMs.  US EPA’s National Emissions Standards for Hazardous Air Pollutants (NESHAPs) for asbestos issued under the Clean Air Act require that owners and operators of demolition or renovation activities:  (1) conduct a pre-activity survey by an accredited asbestos specialist, (2) provide written notice to the relevant agency 10 days prior to demolition and renovation activities when ACMs exceed certain amounts, and (3) employ various precautions and work practices during demolition and renovation activities (e.g. enclosure of work areas, keep ACMs wet during work, proper bagging and disposal of waste materials, etc.). Likewise, corollary state and local programs implement fundamentally similar requirements.

Similarly, the Occupational Safety and Health Administration has issued general occupational and construction standards that require employers and building and facility owners to determine the presence, location, and quantity of ACMs at workplaces and provide notification to employees and tenants, as well as to prevent employee exposure to airborne ACMs above certain permissible exposure limits (PELs).  Because ACMs can be broken up (made “friable”) into dust-sized particles that can disseminate through HVAC systems, a minor maintenance project that dislodges ACMs can quickly generate a facility-wide exposure concern.  A survey to assess ACM locations combined with an Operations & Maintenance Plan that educates maintenance staff and establishes appropriate procedures can avoid exposure risks and the need for extensive abatement and remediation.

Historical surveys and abatement information can provide a degree of confidence, but must be scrutinized carefully in the course of performing environmental due diligence.  A given property may undergo years of investigations and abatement activities, and still not be completely understood.  Surveys are commonly limited in scope or provide only a “representative” assessment, particularly in multi-unit scenarios.  Further, as rehabs are performed, materials can be swapped out and areas that may have previously contained no ACMs, now contain newer materials of concern.  As a result, historical summary reports that ostensibly provide an “all clear,” may actually deliver less than promised.

While the shortest route to liability is to fail to have a proper survey performed, ACMs can present numerous other challenges ranging from regulatory compliance with work site practices to construction management issues, such as selection of and coordination between subcontractors.  All it takes is for a neighbor to complain to the local air agency regarding dust from the construction site to trigger an investigation that leads to costly enforcement, which may be brought against the property owner, the contractor or both.  Civil penalties can accrue on a daily basis and quickly result in tens to hundreds of thousands of dollars, while the costs associated with project delay may magnify the financial impacts.  Indeed, ignorance is not bliss when it comes to ACMs and those who anticipate acquiring a property should plan for adequate due diligence and familiarize themselves with the risks and legal requirements associated with the presence of asbestos.

Proposed Settlement Agreement Requires US EPA to Promulgate Perchlorate Regulations by the End of 2019

US EPA recently agreed in federal court to engage in a rulemaking process over the next three-plus years which would culminate in the promulgation of final perchlorate regulations by December 19, 2019. Perchlorate remains the only unregulated contaminant for which US EPA has made a final determination to regulate since the Safe Drinking Water Act (SDWA) was amended in 1996. Continue Reading

US EPA Proposes Rules Governing Financial Responsibility for Hard Rock Mines & Processing Facilities

On December 1, 2016, US EPA Administrator Gina McCarthy complied with a court order and signed a proposed Superfund rule to require facilities in the hard rock mining industry to provide financial assurance for cleanup and related environmental costs, as required by Section 108(b) of the Comprehensive Environmental Response Compensation and Liability Act (CERCLA). 42 U.S.C. § 9608(b). US EPA intends the rule to provide adequate funding for CERCLA cleanups, if such work is needed at an affected facility.  This rule is expected by US EPA and by the industry to be quite costly, between US$111 and US$171 million a year, according to EPA – more according to some industry critics. In part because of its expected cost, and in part because of its great complexity, the proposal and US EPA’s decisions about the final rule are expected to be controversial.  US EPA has solicited comments about the merits and problems with its proposal, and has requested comments on specific aspects of the proposal. Those comments are due to US EPA 60 days after publication of this proposed rule in the Federal Register. Although that date has not yet been fixed, the comment deadline seems likely to be mid-February 2017.

Details on the proposed rule, including affected facilities and proposed compliance requirements, is available here.

Despite New Administration, Environmental Groups May Influence Changes to US Industrial Stormwater Discharge Permits

Although the focus and priorities of a new US EPA administration under President-elect Trump remain unclear, regulatory changes may be in the works that could require certain industrial entities to either change how they handle stormwater discharges or face lawsuits brought by environmental groups. As described more fully below, US EPA entered into a settlement agreement on August 16, 2016 with a coalition of environmental organizations related to US EPA’s Multi-Sector General Permit for Stormwater Discharges Associated with Industrial Activity (MSGP). That settlement agreement contemplates changes to US EPA’s next promulgation of the MSGP, which applies to stormwater discharges associated with activities within a wide range of industrial sectors including coal mining, oil and mineral extraction, cement manufacturing facilities, landfills, paper and printing facilities, junk yards, and others. Continue Reading

Involved with US Export and Import of Hazardous Waste? New Requirements Are Coming

On November 28, 2016, US EPA published its Final Rule revising the requirements applicable to the export and import of hazardous wastes to and from the United States.  The changes enacted by US EPA make three significant revisions to existing regulations by:

  1. Aligning existing export and import related requirements with the current import-export requirements for shipments between members of the Organization for Economic Cooperation and Development (OECD);
  1. Doing away with paper submittals of all export and import related documents to EPA by mandating that such documents be submitted electronically through EPA’s Waste Import Export Tracking System (WIETS); and
  1. Enabling the electronic validation of consents in the Automated Export System (AES) for export shipments subject to RCRA export consent requirements prior to exit.

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Launch of UK “Food Crime Confidential” Whistleblower Facility Is Reminder to Food Businesses to Ensure Integrity of Supply Chains

On 28 November 2016, the National Food Crime Unit launched ‘Food Crime Confidential’, which is a phone and email reporting or ‘whistleblowing’ facility. Anyone can use the service, but it is targeted mainly at those working in or around the food industry, to allow them to report suspicions in confidence. Food Crime is defined by the Food Standards Agency (“FSA”) as ‘Financially motivated dishonesty relating to food production or supply, which is either complex or results in serious detriment to consumers, businesses or the overall public’. The Unit in particular want to hear about suspicions in relation to:

  • food or drink that has potentially been adulterated or substituted;
  • methods used in workplaces for producing, processing, storing, labelling or transporting food that appears illegal or substandard; and
  • companies or businesses that are selling items of food or drink that purport to be of a certain quality, suggest health benefits or claim to be from a specific place or region, but do not appear genuine or are suspected to be fake.

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US EPA Identifies First 10 Chemicals For Risk Evaluations Under Amended TSCA

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On November 29, US EPA announced the first 10 chemicals it will evaluate for potential risks to human health and the environment under the recently amended Toxic Substances Control Act (TSCA).  US EPA will evaluate the 10 chemicals to determine whether they “present an unreasonable risk of injury” to health or the environment “under the conditions of use.”  Within six months, US EPA must release a scoping document for each of these 10 chemicals, which includes the hazards, exposures, conditions of use and the potentially exposed or susceptible subpopulations that US EPA plans to consider in the risk evaluation. US EPA must complete the risk evaluations within three years (although the Agency may extend the deadline for up to six months if additional data or testing is needed). Details on this announcement and its implications can be found here.