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USEPA May Promulgate CERCLA Financial Assurance Requirements for Power and Chemical Industries, Among Others

On January 6, 2010, the United States Environmental Protection Agency ("USEPA") published an Advance Notice of Proposed Rulemaking ("ANPRM") in the Federal Register for the potential development of financial assurance requirements under Section 108(b) of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"). In this ANPRM, USEPA identified classes of facilities within three industries--Chemical Manufacturing; Petroleum and Coal Products Manufacturing; and Electric Power Generation, Transmission and Distribution--in addition to the previously noticed Hardrock Mining industry, for which it intends to consider and receive comments on the development of financial responsibility regulations. In light of the current economic climate, coupled with the fact that USEPA is over 20 years behind schedule in developing these regulations, this rulemaking may proceed quickly through the notice and comment phase, making it important that interested parties participate early in the drafting of any financial assurance regulations. Under CERCLA Section 108(b), USEPA is required to promulgate requirements "that classes of facilities establish and maintain evidence of financial responsibility consistent with the degree and duration of risk associated with the production, transportation, treatment, storage, or disposal of hazardous substances." These requirements are intended to ensure that a source of funding, other than the taxpayer-funded Superfund Trust Fund, remains available to clean up hazardous substances if the operator declares bankruptcy or is otherwise insolvent. CERCLA Section 108(b)(1) required USEPA to publish a list of classes of facilities, by December 11, 1983, for which financial assurance regulations would first be developed. USEPA did not satisfy this requirement for over 25 years. Then, on February 25, 2009, the Northern District of California held in Sierra Club v. Johnson, 2009 WL 482248, No. C0801409WHA, that USEPA had a nondiscretionary duty to publish notice of classes, and ordered USEPA to "identify and publish notice of classes as specified in Section 108(b)(1) by May 4, 2009." On July 28, 2009, USEPA published a Priority Notice of Action in the Federal Register, identifying Hardrock Mining facilities as one of the classes for which financial responsibility requirements under CERCLA Section 108(b) would first be developed. In that notice, USEPA stated its intent to consider other classes of facilities for possible development of financial responsibility requirements. In the January 6, 2010 ANPRM, USEPA identified the Chemical Manufacturing, Petroleum and Coal Products Manufacturing, and Electric Power Generation, Transmission, and Distribution industries as additional classes it would consider in developing CERCLA Section 108(b) financial assurance requirements. USEPA also identified the Waste Management and Remediation Services industry, the Wood Product Manufacturing industry, the Fabricated Metal Product Manufacturing industry, the Electronics and Electrical Equipment Manufacturing industry, and facilities engaged in the recycling of materials containing CERCLA hazardous materials as requiring further study before the regulatory development process begins.

USEPA provided its approach for identifying the additional classes of facilities in the January 6, 2010 ANPRM; however, USEPA has explicitly stated that it is not seeking comments on its decision to identify these classes, nor does the identification of these classes itself create any duty or obligation on any party. Additionally, USEPA stated that the fact that a particular industry sector was not identified in the ANPRM does not indicate that it is no longer being considered in relation to the development of CERCLA Section 108(b) financial assurance responsibilities. USEPA has stated that it will examine each of the four identified industries' "specific activities, practices, and processes involving hazardous substances at these facilities, as well as federal and state authorities, policies and practices to determine the risks posed by these classes of facilities and whether requirements under CERCLA Section 108(b) will effectively reduce these risks." If it determines that financial assurance requirements are in fact warranted, USEPA will next need to determine what types of assurance mechanisms will be permitted. Types of financial assurances include trust funds, surety bonds, letters of credit, insurance and issuance of financial tests and corporate guarantees. USEPA will be accepting comments on these issues, and others that are listed in the January 6, 2010 ANPRM through February 5, 2010. The full text of the Federal Register notice can be found here. Additionally, USEPA's web page providing updates on the status of its identification of classes of facilities and development process for financial assurance regulations under CERCLA Section 108(b) is located here.

© 2010 Schiff Hardin LLP This publication has been prepared for the general information of clients and friends of the firm. It is not intended to provide legal advice with respect to any specific matter. Under rules applicable to the professional conduct of attorneys in various jurisdictions, it may be considered advertising material.


USEPA May Promulgate CERCLA Financial Assurance Requirements for Power and Chemical Industries, Among Others

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USEPA May Promulgate CERCLA Financial Assurance Requirements for Power and Chemical Industries, Among Others