New Risk Management Program Risks Erin Ward and Taylor Hoverman - - PowerPoint PPT Presentation

February 20, 2017

Erin Ward and Taylor Hoverman

New Risk Management Program Risks

RMP Enforcement

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RMP Enforcement Data

Enforcement Actions

2,800

Approximate number actions since 2004

• 1103 in the last 5 years

20+

Number of judicial actions

$261M+

Amount paid in penalties, injunctive relief, and supplemental environmental projects

• Nearly $45M in penalties alone

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EPA Enforcement Data – All RMP Facilities

50 100 150 200 250 300 350 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Enforcement Actions

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EPA Enforcement Data – All RMP Facilities

1 2 3 4 5 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Judicial Settlements

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EPA Enforcement Data – All RMP Facilities

$0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Penalties

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EPA Enforcement Data – All RMP Facilities

$0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Average Amount per Action

Penalties SEP Injunctive Relief

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Data for Petrochemical Manufacturers and Refineries

Enforcement Actions

87

Actions since 2004

• 59 in the last 5 years

7

Judicial actions

$168M

Paid in penalties, injunctive relief, and supplemental environmental projects

• Over $11.3M in penalties alone

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EPA Enforcement Data – Petrochemical Facilities

2 4 6 8 10 12 14 16 18 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Actions Against Petrochemical Facilities

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EPA Enforcement Data – Petrochemical Facilities

$0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Penalties

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EPA Enforcement Data – Petrochemical Facilities

$0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Average Amount per Action

Penalties per action SEP per action Injunctive relief per action

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Judicial Settlements

Recent Enforcement Actions

Millard Refrigerated Services (2015) $3M penalty Tyson Foods, Inc. (2013) $3.95M penalty, injunctive relief (audits) Kinder Morgan (2012) $316,000 penalty BP North America (2010) $15M penalty, injunctive relief

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• 3-year cycle
• Frequently extend into later cycles
• Focuses limited resources on areas

where EPA believes:

– Significant non-compliance – Federal enforcement efforts can make a difference

National Enforcement Initiative

Background

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National Enforcement Initiatives

Fiscal Year 2017 – 2019

• Reducing air pollution from largest sources
• Cutting hazardous air pollutants (expanded initiative)
• Ensuring energy extraction activities comply with environmental laws
• Reducing pollution from mineral processing operations
• Reducing risks of accidental releases at industrial and chemical facilities

(new initiative)

• Keeping raw sewage and contaminated stormwater out of Nation’s waters
• Preventing animal waste from contaminating surface and ground water
• Keeping industrial pollutants out of the Nation’s waters (new initiative)

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National Enforcement Initiatives

Fiscal Year 2017 – 2019

• Reducing air pollution from largest sources
• Cutting hazardous air pollutants (expanded initiative)

Air

• Ensuring energy extraction activities comply with environmental laws

Energy Extraction

• Reducing pollution from mineral processing operations
• Reducing risks of accidental releases at industrial and chemical facilities

(new initiative)

Hazardous Chemicals

• Keeping raw sewage and contaminated stormwater out of Nation’s waters
• Preventing animal waste from contaminating surface and ground water
• Keeping industrial pollutants out of the Nation’s waters (new initiative)

Water

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Criminal Prosecutions

Recent Enforcement Actions

Mann Chemical LLC (2015) $200K fine

3 years probation

Roberts Chemical Company, Inc. (2015) $200K fine

5 years probation

Hershey Creamery Company (2008) $100K fine

1 year probation

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• Joint effort between DOJ and Labor since December 2015

– OSHA, Mine Safety and Health Administration, and Wage and Hour division

• Title 18 and environmental criminal offenses
• DOJ Environment and Natural Resources Division

– Increase frequency and effectiveness of prosecuting worker endangerment violations – Strengthening efforts to pursue civil cases involving worker safety violations

Worker Endangerment Initiative

Background

Revised EPA RMP Regulations

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Third-Party Audit Requirements

EPA Proposed Rule

1

Third-party audits required after:

• Reportable releases
• Findings of significant non-compliance with Prevention Program 2 or 3

requirements Ø At the discretion of the implementing agency

2

Stringent independence criteria

3

Findings of third-party audit treated as deficiencies

• Submit schedule to correct deficiencies within 90 days with certification

4

Precludes attorney-client privilege for third-party audit reports and “related records”

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Third-Party Audit Requirements

EPA Final Rule

1

Third-party audits required after:

• Reportable releases
• Findings of significant non-compliance with Prevention Program 2 or 3

requirements Ø At the discretion of the implementing agency

• Identified conditions that could lead to accidental release

2

Stringent independence criteria

• Relaxed the standard in the final rule

3

Findings of third-party audit treated as deficiencies

• Submit schedule to correct deficiencies within 90 days with certification

4

Precludes attorney-client privilege for third-party audit reports and “related records”

• Facility retains audit reports – nothing submitted to implementing agency

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ü Third-party audits often less thorough and informed ü Implementing agencies discretion to require them ü Independence still constraining ü Uncertainty regarding scheduled compliance audits

Third-Party Audit Problems

EPA Final Rule Assessment

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Safer Technology Alternative Analysis (STAA) Requirements

EPA Proposed Rule

1

Requires an assessment of Inherently Safer Technology

• Additional element of PHA

2

Not required to implement IST but must assess feasibility

3

Required for Program 3 facilities in 3 industries:

• Petroleum and coal products manufacturing (NAICS 324)
• Paper manufacturing (NAICS 322)
• Chemical manufacturing (NAICS 325)

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Safer Technology Alternative Analysis (STAA) Requirements

EPA Final Rule

1

Requires an assessment of Inherently Safer Technology

• Additional element of PHA

2

Not required to implement IST but must assess feasibility

3

Required for Program 3 facilities in 3 industries:

• Petroleum and coal products manufacturing (NAICS 324)
• Paper manufacturing (NAICS 322)
• Chemical manufacturing (NAICS 325)

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ü Difficult to implement after design phase ü Few technologies are “inherently safer” across the board

• Could result in risk-shifting

ü Often IST is not feasible or it would have been implemented ü Fodder for environmental groups and community organizations

• Could demand implement IST regardless of cost
• Potential hindsight analysis in case of an accidental release

ü No benefit of assessing IST if not implemented

Safer Technology Alternative Analysis (STAA) Problems

EPA Final Rule Assessment

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Responding Facility Designation Requirements

EPA Proposed Rule

1

Allows local emergency response agencies to designate a facility as a “responding facility”

• Responding facilities have enhanced emergency preparedness

requirements

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Responding Facility Designation Requirements

EPA Final Rule

1

Allows local emergency response agencies to designate a facility as a “responding facility”

• Responding facilities have enhanced emergency preparedness

requirements

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ü Illegal delegation of regulatory authority ü No opportunity to contest or appeal ü EPA removed this provision from the final rule because

ü It would allow local governments to shift their emergency response

• bligations to facilities

ü Small facilities cannot manage all their emergency response needs

Responding Facility Designation Problems

EPA Final Rule Assessment

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Required Disclosures to LEPCs

EPA Proposed Rule

1 Names and quantities of regulated substances over threshold quantity 2 Accident history information 3 Compliance audit report summaries

• Date
• Name and contact information of auditor and facility contact
• Brief description of audit findings and appropriate response
• Schedule for addressing findings

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Required Disclosures to LEPCs, cont.

EPA Proposed Rule

4

Incident Investigation Reports

• Description and timeline of incident
• Names and contact information of investigation team
• Direct, contributing, and root causes
• On-site and offsite impacts
• Emergency response actions taken
• Recommendations and schedule for implementation

Emergency response exercise schedules and reports

6

Inherently safer technologies (if required for PHA)

5

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Required Disclosures to LEPCs

EPA Final Rule

1 Names and quantities of regulated substances over threshold quantity 2 Accident history information 3 Compliance audit report summaries 4 Incident Investigation Reports Inherently safer technologies (if required for PHA) 5 Emergency response exercise schedules and reports 6 Replacement: “Any information that local emergency planning and response organizations identify as relevant to local emergency planning”

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Required Disclosures to the Public

EPA Proposed Rule

Names of regulated substances held above threshold quantities 1 Safety data sheets for all regulated substances above threshold quantities 2 Accident history 3 Emergency response information

• Responding source?
• Name and phone number of coordinating local emergency response
• rganization(s)
• Responding sources: procedures for informing LEPCs and public about

accidental releases 4 Emergency response exercise schedules and reports 5 Name and phone number of local emergency response organization(s) 6

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Required Disclosures to the Public

EPA Final Rule

Names of regulated substances held above threshold quantities 1 Safety data sheets for all regulated substances above threshold quantities 2 Accident history 3 Emergency response information

• Responding source?
• Name and phone number of coordinating local emergency response
• rganization(s)
• Responding sources: procedures for informing LEPCs and public about

accidental releases 4 Emergency response exercise schedules and reports 5 Name and phone number of local emergency response organization(s) 6

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ü Security risks

– No background checks for LEPCs – Unfettered discretion for LEPCs to request any information they can connect to “emergency planning” – Disclosures to the public previously reserved for LEPCs – No opportunity to object or refuse to disclose sensitive information – No protections for sensitive information once released

Required Disclosures Problems

EPA Final Rule Assessment

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Other Proposed Provisions

EPA Proposed Rule

• 1. Field and table top exercises
• 2. Root cause analysis for incident investigations
• 3. Extends compliance audit requirement to all covered processes
• 4. Includes RAGAGEP in required process safety information
• 5. Adds a literature review requirement to PHA
• 6. Changes catastrophic release definition
• 7. Adding “near misses”

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Other Proposed Provisions

EPA Final Rule

• 1. Field and table top exercises
• less frequent
• 2. Root cause analysis for incident investigations
• minor changes
• 3. Extends compliance audit requirement to all covered processes
• 4. Includes RAGAGEP in required process safety information
• 5. Adds a literature review requirement to PHA
• 6. Changes catastrophic release definition
• 7. Adding “near misses”

Challenging the Final Rule

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Options for Challenging EPA Final Rule

Litigation

• Congressional Review Act
• Petition for Reconsideration to EPA & Clean Air Act (CAA) § 307(d) stay
• Petition for Judicial Review & Administrative Procedural Act (APA) § 705 stay
• EPA-initiated notice and comment rulemaking

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Petition for Review

Litigation

• Requests judicial review of the final rule
• Limited to objections raised during public comment period
• File in D.C. Circuit within 60 days of publication in the Federal Register

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Petition for Reconsideration

Litigation

• Objections that could not be raised during comment period
• Impracticable to raise by end of comment period OR
• Arose after the end of the comment period
• E.g., requirement or provision introduced by EPA for first time in final rule
• Generally filed simultaneously with Petition for Review
• Filing does not stop the clock for filing Petition for Review under the CAA § 307

Ex: significant and unrecoverable costs incurred if requirements take effect

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• Legal Standard for Stay:

Same as preliminary injunction

• Time period:

Pending judicial review (no limit)

• Decision-maker:

Agency or court

APA 705 Stay?

Litigation

RMP Proposed Rule Provision Time to Comply

Emergency Response Coordination Activities 1 year Emergency Response Program (if requested) 3 years Other New Provisions in Rule 4 years Correcting or Resubmitting RMPs with New Data 5 years

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• Legal Standard for Stay:

Reconsideration by Agency

• Time Limit:

3 month limit

• Decision-maker:

Agency

CAA 307(d) Stay?

Litigation

Hogan Lovells

February 20, 2017

Erin Ward and Taylor Hoverman

New Risk Management Program Risks