Navigating the transition: Key chemicals industry issues to watch in the Biden administration

2021-01-28

While news stories and campaign rhetoric can frequently create expectations of immediate shifts after a change in administration, most changes happen slowly in the federal government, and constraints on resources means that many areas of environmental regulation and permitting policy will remain unchanged in the early years of the new administration.

EPA’s Risk Management Program (“RMP”) Regulation

RMP regulations govern safety protocols in industries using hazardous chemicals. In November 2019, the Trump administration rescinded many of the significant Obama-era amendments to the RMP, which many in the industry believed to be overly burdensome and costly. The removed provisions included requirements regarding third-party audits, incident investigation root cause analysis, and safer technology and alternatives analyses. The Trump administration’s amendments were intended to shift from rules that increase compliance costs for the entire regulated community to case-specific oversight of poorly performing facilities. The Trump administration’s RMP Rule changes are currently facing legal challenges in the D.C. Circuit. In December 2020, the D.C. Circuit granted an unopposed motion to stay this litigation until March 22, 2021, which was requested in part to allow the incoming Biden administration time to review the 2019 RMP Rule and consider its position. Courts regularly allow new administrations some limited time to undertake such reviews. However, it is unlikely that a Biden EPA would simply stop defending the rule in its existing form, or that the court would allow it to alter the rule’s current requirements without following the time-consuming process for revising a regulation.

The Biden administration has made environmental justice a focus of its environmental platform. Environmental justice is defined by EPA as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income, with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.” It is likely that the Biden administration will revert to the Obama EPA model of RMP regulation as part of its environmental justice initiative, including third-party audits and incident investigation root cause analysis. Indeed, the administration indicated in a fact sheet released on January 20, 2021 that this rule is on its list of agency actions to review. Because the Trump administration’s RMP Rule revisions already have gone into effect, it will take the Biden administration time to complete the administrative rulemaking process necessary to implement a more robust RMP Rule, and the final rule will then be subject to challenge in court. As a result, it is unlikely that there will be changes to the RMP Rule in the first year of the new administration. However, as discussed further below, the enforcement of the existing RMP Rule may change under the new administration.

Environmental Enforcement in the Chemical Manufacturing Sector

For years, EPA has focused its enforcement efforts on emissions of ozone precursors and hazardous air pollutants from the chemical manufacturing sector. These efforts generally related to enforcement of leak detection and repair requirements, flare performance requirements, tank emission limitations, wastewater treatment system requirements (e.g., the benzene waste operations NESHAP and VOC emission limitations), and to a lesser extent, enforcement of MACT and NSPS emission limitations. We would expect these enforcement efforts to continue, with the following potential changes in emphasis.

Environmental justice. The effects of noncompliance on environmental justice communities has for many years been a part of the EPA’s case evaluation and enforcement processes. We expect a Biden EPA to emphasize environmental justice in enforcement by leaning in more aggressively when known noncompliance is affecting an environmental justice community, increasing its use of the EJSCREEN screening and mapping tool as an enforcement targeting method, and increasing its release reporting and risk management enforcement in areas with environmental justice communities.

Beyond compliance settlements. We expect a return to the Obama EPA’s use of extra-regulatory requirements in settlements. These could include using elements of so-called Next Generation compliance developed by the Obama EPA, and importing regulatory requirements from other federal agencies (e.g., using PHMSA requirements in pipeline spill cases) and other EPA programs (e.g., using refinery flaring regulations to reduce flaring emissions in petrochemical facility settlements).

Storage tank and wastewater treatment systems. We expect a Biden EPA to be less solicitous of state enforcement solutions to excess emissions from storage tanks and water treatment systems at petrochemical production and storage facilities. An EPA-centric enforcement approach might not achieve significantly greater reductions in VOCs from these operations, but it could result in a higher number of EPA cases and increased costs to the chemical sector, particularly if extra-regulatory requirements are included in settlements.

Section 112(r) risk management program. The Trump EPA focused on RMP cases where a company violated a plain industry standard, particularly where industrial accidents affected workers or communities. We would expect a Biden EPA to broaden somewhat the kinds of RMP cases it will be willing to bring, including cases where the applicability of an industry standard is not clear.

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JD Supra, 28 January 2021
; https://www.jdsupra.com/legalnews/navigating-the-transition-key-chemicals-7116620/