Audit, Compliance and Risk Blog

On March 11, the Trump Administration issued its budget proposal for federal Fiscal Year (FY) 2020 (October 1, 2019 through September 30, 2020), entitled “A Budget for a Better America: Promises Kept. Taxpayers First.” The proposal includes a 31% cut in the Environmental Protection Agency (EPA) budget, from $8.28 billion in FY 2019 (under a Continuing Budget Resolutions rather than a fully-new federal budget), to $6.07 billion for FY 2020, with corresponding personnel cuts from 14,376 full-time-equivalent employees (FTE) to 12,415. (these are numbers for EPA in the government-wide budget from the Office of Management and Budget (OMBB) summary of the entire budget proposal, and EPA provides additional details on its own website).

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After a long rulemaking, the US Environmental Protection Agency (EPA) has just promulgated rules defining certain waste pharmaceuticals as “hazardous wastes” under the Resource Conservation and Recovery Act (RCRA), and establishing standards for their management by selected healthcare and “reverse distribution” waste management facilities. These regulations replace general RCRA generator and treatment requirements otherwise applicable to hazardous wastes.

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On December 11, 2018 the Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (Corps) jointly proposed to revise their regulatory definitions of “waters of the United States”, applying authority under the Clean Water Act (CWA). CWA does not define this term clearly, so after decades of rulemakings and litigation, it remains in dispute. Generally, Democratic presidents and the judges they appoint tend to support geographically and semantically broad applications, while with Republican presidents and the judges they appoint tend to take narrower views. The latest proposal would narrow the definition, reversing Obama-era rules adopted in June 2015, and presently in effect in 22 states based on the present status of ongoing judicial appeals (I summarized the 2015 rules, and the litigation leading up to them here and the Trump-era EPA’s 2017 proposal to roll back the 2015 revisions here). The agencies characterize this narrowing as an increase in certainty for stakeholders, accomplished by eliminating some of the site-specific discretion that the 2015 rules provided to permit writers. Because of the government shutdown, this latest proposal was not published in the Federal Register until February 14, 2019.

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If you’re contemplating significant changes at a facility that’s regulated as a “major source” under the Clean Air Act (CAA), you’d better figure out whether those changes will “modify” the source enough to trigger significant pre-construction review and permitting by the US Environmental Protection Agency (EPA) or its state or local delegee. The likely answer to questions like yours has changed with CAA amendments and regulations over the decades. EPA has just changed them again, after ending a decade long year delay of a regulatory “interpretation” published in the last week of George W. Bush’s presidency, and stayed by the Obama-era EPA throughout his presidency, and now reaffirmed and activated by the Trump-era EPA.

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The Trump-era Environmental Protection Agency (EPA) has proposed to repeal and replace another of the Obama-era EPA’s signature efforts to reduce greenhouse gas (GHG) emissions. EPA has now proposed an “Affordable Clean Energy Rule”, to replace the “Clean Energy Plan” adopted in 2015 but stayed by litigation. The new rule softens the mandates in the earlier rule, and offers states more flexibility to design their own efforts to control greenhouse gas (GHG) emissions from existing fossil fuel-fired electricity generating units (EGUs) by eliminating Clean Power Plan requirements that states consider operational changes “outside the fenceline” of the regulated EGUs.

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The ongoing administrative battle over the Environmental Protection Agency’s (EPA’s) Accidental Release Prevention (ARP) program requirements has had another skirmish. On August 17, the US Court of Appeals for the District of Columbia Circuit (DC Circuit) lambasted EPA’s latest deferral of ARP requirement revisions as outside the agency’s Clean Air Act (CAA) authority, and otherwise “arbitrary and capricious,” and vacated that deferral. However, the Court did nothing about EPA’s pending proposal to rescind most of those changes and reinstate longstanding requirements that many see as inadequate.

What’s the Current Status of ARP Requirements?

ARP rules specify “regulated substances” and threshold quantities for which onsite incidents could produce harmful offsite consequences, “risk management plan (RMP)” requirements to be instituted by facilities in order to manage those risks, and associated procedural and reporting requirements. In the last week before President Obama left office, EPA completed a multi-year review of its ARP program, responding to his Executive Order Number 13650 from 2013 (I wrote about these revisions here). Then, when President Trump took office, EPA reversed course, repeatedly deferring the effective date of those revisions while the agency reviewed them. In June 2017 EPA issued the latest of these deferrals, citing pending petitions for review by industry groups, and the agency’s need to reconsider the matter to justify deferring the effective date of the (Obama era) revisions for 20 months.

In May 2018 EPA completed its review, and published a proposal in the Federal Register to rescind almost all these expansions and return ARP requirement to those in place before 2017 (I summarized the proposal here). EPA also included an alternative proposal that retained a few more elements, and requested public comment on both versions no later than July 30, 2018.

What Has the DC Circuit Just Decided?

The DC Circuit case was brought by environmental and health groups, supported by a number of state governments. They claimed that EPA’s 20 month deferral exceeded the three month limit provided the agency by the CAA. They also noted that the agency had offered no substantial justification for overturning a final decision (the January 2017 revisions) after a multi-year rulemaking.

The case was heard by a 3 judge panel of the DC Circuit (interestingly, the panel include Judge Brett Kavanaugh, whose nomination to the US Supreme Court is pending and who took no part in this decision). The remaining judges agreed with the plaintiff’s arguments, found EPA’s delay to be “arbitrary and capricious”, and vacated the deferral rule.

Now What?

With the deferrals gone, the 2017 revisions take effect as issued in the waning days of the Obama administration. After the first two Trump Administration deferrals, the revisions would have been effective in June 2017 with staggered compliance deadlines. Facilities were to ensure coordination of their onsite activities with offsite response agencies by March 2018, institute enhanced RMP activities by March 2021, and formally revise their RMPs by March 2022. On September 21, the Court issued another order directing EPA to begin enforcing the 2017 rules immediately. This means that the coordination requirements identified above are active, and other elements remain on their original phase-in schedule..

But EPA’s May 2018 proposal to rescind most of the January 2017 amendments was not part of this case, and so is unaffected. As of this writing EPA has not made any statement about further appeal of the August 2018 court decision, but it’s safe to assume that the agency is proceeding with its own May 2018 proposal – presumably paying attention to the procedural flaws highlighted in the court order. I expect EPA will eventually issue some version of its proposed regulatory roll-back, which will trigger further litigation about whether the dramatic change is justified by the rulemaking record.

Self-Assessment Checklist

Does the organization own or operate any facility with any “stationary source” subject to ARP requirements?

• If so, has the organization considered the impacts on its operations and compliance position under potential revisions?

Where Can I Go For More Information?

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On April 19, 2018, EPA released their Environmental Justice FY2017 Progress Report. The report commemorates the 25th anniversary of the Office of Environmental Justice (EJ), highlighting progress advancing EJ in minority, low-income, tribal, and indigenous communities. Among their 2017 successes, EPA documented for the first time measurable environmental outcomes in three program areas: fine particulate air pollution (PM2.5), small drinking water systems, and tribal drinking water systems. In each area, EPA measured significant improvements:

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The Environmental Protection Agency (EPA) is expanding its attention to asbestos and its associated hazards, including both existing uses and possible new uses. EPA is undertaking these initiatives under the aegis of extension of its authority under the Toxic Substances Control Act (TSCA), enacted in 2016 Amendments to TSCA -- the “Frank R. Lautenberg Chemical Safety for the 21st Century Act.” (I wrote about provisions relating to existing chemical here, and for new chemicals and new formulations of existing chemicals here).

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Federal agencies have marked the beginning of Atlantic hurricane season by reminding employers and the public of the risks from hurricanes, and how to plan for and respond to events. These include a compilation of advisory documents on the Occupational Safety and Health Administration (OSHA) website, which also includes links to additional information by the Federal Emergency Management Agency (FEMA), Centers for Disease Control and Prevention (CDC), and the National Hurricane Center. This information is too late to help people in the Carolinas who’ve been inundated by Florence, but does provide useful reminders.

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The Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) empowers the Environmental Protection Agency (EPA) to define and regulate pesticides meeting statutory qualifications, providing extensive procedural directions how to do so. In addition, the Federal Food, Drug, and Cosmetic Act (“FFDCA”) authorizes EPA to regulate the use of pesticides on foods according to specific statutory standards, and grants EPA limited authority to establish tolerances for pesticide residuals on foods. These directions govern EPA’s analyses of applications for registration, ongoing evaluations of evolving scientific understanding and practical experience with pesticides that have been registered, and response to public comments and petitions (I provided a basic summary of FIFRA registration procedures here).

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