On August 8, 2014, a coalition of environmental groups filed a Petition for Writ of Mandamus  to the D.C. Circuit seeking an order that US EPA “has unreasonably delayed issuing financial assurance rules” under the federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) Section 108(b), 42 U.S.C. 9608, and directing US EPA to finalize the rules under this part for several industry categories (including hard rock mining, chemical manufacturing, petroleum and coal products manufacturing, and the electric power generation, transmission, and distribution industries) by January 1, 2016.   The petition argues that financial assurance rules will solve the problem of funding shortfalls for superfund site remediation where potentially responsible parties (PRPs) become insolvent and public funds are not available to cover cleanup activities.

CERCLA Section 108(b), 42 U.S.C. 9608, permits US EPA to identify certain classes of facilities that must maintain “financial responsibility” consistent with “the degree and duration of risk associated with the production, transportation, treatment, storage or disposal of hazardous substances.”  This provision of CERCLA was passed in 1980; however, US EPA had not yet promulgated a Superfund financial responsibility rule. In 2009, a coalition of environmental groups sued US EPA in California to force the agency to adopt such “financial responsibility” (or “financial assurance”) rules under CERCLA.  That lawsuit resulted in US EPA taking the first step (Sierra Club v. Johnson).  It identified hard rock mining as the first industry for which US EPA would develop financial responsibility requirements and identified three additional classes of facilities (identified above) that would eventually be assessed for possible financial responsibility requirements.  US EPA also stated that it would begin early assessment for the following additional industries: waste management and remediation services, wood product manufacturing, fabricated metal product manufacturing, electronics and electrical equipment manufacturing, and recycling facilities that handle hazardous substances. 

As of that time, US EPA has not taken the next step of developing draft or proposed financial assurance requirements for these categories.  The coalition is frustrated by this perceived lack of progress. However, federal rulemaking procedures are incredibly complex and any proposed financial responsibility rules will impact thousands of companies operating in the broad industry categories of hard rock mining, power generation/transmission/distribution, chemical manufacturing, and petroleum/coal products manufacturing industries–accordingly, US EPA’s rules should be the result of thoughtful and cautious deliberation–not rushed rulemaking by court order.

Moreover, once US EPA promulgates a financial responsibility rule, it is required by statute to begin implementing the rule within four years, which means that if the petition is successful, impacted industries might be required to offer financial assurances by as early as January 2020.  To the lay person this may seem like a great deal of  time, but for effected companies this would represent a sudden and dramatic change in business operations and seriously impact investment and strategic planning decisions for projects within the United States.  We will continue to follow this case and provide updates here on our blog.