EPA Will Reconsider Legal Issues
After taking over at the EPA, Administrator Scott Pruitt took less than 3 weeks to grant an industry petition to delay implementation of ex-President Barack Obama’s EPA’s final amendments to the Agency’s Risk Management Program (RMP) (January 13, 2017, Federal Register (FR)). Calling themselves the RMP Coalition, the petitioners comprise seven of the nation’s most prominent industry organizations: American Chemistry Council, the American Forest & Paper Association, the American Fuel & Petrochemical Manufacturers, the American Petroleum Institute, the Chamber of Commerce, the National Association of Manufacturers, and the Utility Air Regulatory Group. According to the Coalition, procedural and legal flaws pervade the final amendments, which the Coalition is also challenging in the U.S. Court of Appeals for the D.C. Circuit.
Most of the complaints in the petition focus on amendments the EPA allegedly made final without presenting them in sufficient detail in the proposed amendments (March 14, 2016, FR), thereby denying the public the opportunity to comment on the changes. The petitioners also contend that the EPA did not prepare a complete cost-benefit analysis, failed to explain the legal foundation for several amendments, added over a hundred documents to the rulemaking record the day the final amendments were published, and imposed information release requirements that could severely compromise security at the affected RMP facilities.
In a March 13, 2017, letter, Pruitt informed the RMP Coalition that he was granting their request for reconsideration. This was followed with a final rule extending the effective date of the amendments by 90 days (March 16, 2017, FR). On April 3, 2017, the EPA published a proposed in the FR to further delay the effective date of the RMP final rule to February 19, 2019. According to the FR, this delay would allow “the Agency time to consider petitions for reconsideration of this final rule and take further regulatory action.” Further “regulatory action” could include proposing and finalizing a rule to revise the RMP amendments.
In the March 16 rule, Pruitt stated that Clean Air Act (CAA) Section 307(d)(7)(B) authorizes the EPA administrator “to commence a reconsideration proceeding if in the Administrator’s judgment the petitioner raises an objection to a rule that was impracticable to raise during the comment period or if the grounds for the objection arose after the comment period but within the period for judicial review.”
RPM Rule and Amendments
Under the RMP, approximately 12,500 stationary sources with threshold amounts of listed chemicals used on-site in processes must assess the potential impacts of releases of those chemicals; undertake steps to prevent those releases; plan for emergency response to releases; and summarize all this information in a risk management plan submitted to the EPA.
The amendments addressed in the Coalition’s petition followed Obama’s 2013 Executive Order (EO), which directed federal agencies to enhance the safety and security of chemical facilities and reduce risks associated with hazardous chemicals to owners and operators, workers, and communities.
EPA’s main amendments to the RMP regulations subject facilities to additional reporting following investigations of chemical releases or incidents that could have resulted in release; require safer technology and alternatives analyses (STAAs) at paper manufacturing, petroleum and coal products manufacturing, and chemical facilities; require independent third-party compliance audits at facilities if there has been a reportable accident; require facilities to provide additional emergency planning information to Local Emergency Planning Committees (LEPCs); and also require facilities to provide certain existing chemical information to the public upon request.
Issues for Reconsideration
Below we summarize the coalition’s main complaints about the RMP amendments:
- LEPC disclosures. The final amendments require facilities to provide LEPCs with information relevant to emergency planning, including information about the security vulnerabilities associated with a facility’s hazardous substances.
Coalition members say that had these requirements appeared in the proposal, they would have raised strenuous objection to such disclosures and recommended measures to ensure proper access and public safety. Instead, the EPA included broad LEPC disclosure requirements only in the amendments, precluding public input on these provisions.
- Third-party audit trigger. The proposed amendments included two triggers for EPA’s third-party audit requirement: an accidental release or a requirement by an implementing agency that a third-party conduct an audit because of facility noncompliance.
In the final amendments, the EPA retained the first trigger but replaced the second trigger with a requirement that an implementing agency order a third-party audit when there are conditions at the facility that could lead to an accidental release of a regulated substance. The EPA explained that examples of such conditions include significant deficiencies with process equipment containing regulated substances, such as unaddressed deterioration, rust, corrosion, inadequate support, and/or other lack of maintenance; small pinhole releases of RMP chemicals; and the occurrence of several prior accidental releases that did not meet the reporting criteria.
Although the EPA claims that it only modified the criterion, the coalition argues that the final provision transformed a predictable trigger (noncompliance with specific regulations) into an unpredictable one that relies entirely on the implementing agency’s discretion to determine which conditions could lead to an accidental release.
“The proposed rule had identified a specific condition EPA thought was problematic, namely noncompliance with regulations,” wrote the Coalition. “The final rule provision is unrelated to legal compliance and subject to the whims and imagination of the implementing agency. Commenters had no opportunity to object to the incredible breadth of a requirement that covers any conditions that could lead [to an accidental release], no matter how remote the chance of the condition resulting in an accidental release.”
- Cost-benefit. The EPA quantified the damages from releases and accidents over the past 10 years and claimed that “some portion of future damages would be prevented through implementation of a final rule.” According to the Coalition, that was the extent of the Agency’s analysis of the benefits of the amendments.
“EPA did not even attempt to link the cost of the proposed provisions with the potential benefit, much less analyze the impact on industry and the public,” wrote the Coalition. “Instead, with no detailed explanation, EPA simply claimed that, by reducing accidents and improving disclosure, the Proposed Rule would ‘provide benefits to potentially affected members of society.’”
While the CAA requires the EPA to include cost findings in proposed rules, the Coalition continued, the Agency failed to quantify benefits, link costs and benefits to specific provisions of the proposed rule, and include cost findings in the proposed and final rules.
“These failures violate EPA’s obligations under the CAA and Michigan v. EPA and deprived Coalition members of an opportunity to provide comments that would have impacted EPA’s analysis,” the Coalition argues. “In Michigan v. EPA, the U.S. Supreme Court held that the CAA imposes a duty on the Agency to propose cost findings for public comment unless Congress expressly and unequivocally prohibits consideration of costs.”
Also, the CAA section that directs development of the RMP requires reasonable regulations and appropriate guidance to provide, to the greatest extent practicable, for the prevention and detection of accidental releases of regulated substances.
“This statutory language closely tracks the ‘necessary and appropriate’ framework that compelled EPA to consider costs under Section 112(n)(l) of the Act in Michigan v. EPA,” states the Coalition. “Thus, to promulgate a ‘reasonable’ and ‘appropriate’ RMP regulation that is ‘practicable,’ EPA must adequately assess the costs of its proposed rule and determine whether they are disproportionate to the benefits the proposed rule would confer.”
- Compliance audits. The Coalition further complains that the EPA revised the regulatory text in the proposed rule from the existing requirement for an owner or operator to evaluate “compliance with the provisions of this subpart at least every three years” to the proposed requirement to evaluate “compliance with the provisions of this subpart for each covered process, at least every three years….” (emphasis added)
“However, nothing in the preamble to the proposal alerted the public to this change, much less provided a discussion of the rationale for this revision and the significant impacts that would result from such a change,” asserted the Coalition. “EPA provided neither notice of nor a justification for this regulatory amendment. Though a few commenters detected EPA’s revision and questioned its inclusion, most missed this buried revision.”
- Third-Party audits. No Agency legal justification of third-party audits was ever made available for public comment, claims the Coalition. “When commenters pressed EPA on its authority to enlist private parties to enforce the Act through third-party audits, the Agency purported to rely on a 1989 Senate Committee report that makes a passing reference to ‘consultants,’” states the Coalition. “That Senate report was not part of any analysis in the proposal. Nor does it explain how the statutory text of Section 112—as enacted in 1990—provides legal authority for third-party audits for the RMP.”
Also, the EPA argues in the preamble to the final rule that third-party audits do not constitute enforcement and, therefore, do not run afoul of legal limits on the EPA using private parties to enforce the CAA.
“Yet in other parts of the preamble to the final rule and in the response to comment document, EPA states that third-party audits are an enforcement tool to push companies toward the Agency’s view of ‘compliance,’” says the Coalition. “None of this equivocating analysis appeared in the Proposed Rule.”
- STAA. EPA’s initial legal justification for the STAA requirement was based in CAA Section 112(r)(7)(B). When industry argued that that section provided no authority for STAA, says the Coalition, the EPA instead invoked Section 112(r)(7)(A), providing a lengthy analysis of that provision in the final rule, which no one had an opportunity to comment upon.
- Supporting documents. After the close of the comment period, the EPA posted 129 documents to the rulemaking docket, and 119 of these were posted on January 13, 2017, the day the final rule was published. This additional information, which the Coalition says supports core parts of the final amendments, was not available for review during the comment period.
- West Texas. When Obama issued his EO and during the entire period the EPA was preparing its proposed rule, it was believed that the West, Texas, disaster was caused by carelessness and improperly managed hazardous materials. Much of EPA’s proposal was based on this belief. But in May 2016, the Bureau of Alcohol, Tobacco, Firearms, and Explosives announced that the fire that triggered the explosion had been intentionally set and the result of a criminal act.
“This revelation undercuts the assumptions underlying the proposed rule for both EPA and commenters,” says the Coalition. “Different measures are required to increase security and prevent criminal acts than those designed to avoid accidental releases.”
Finally, the Coalition states that the EPA “has not demonstrated that any of its finalized provisions would improve safety or prevent accidents that harm American workers, citizens, or property.”