EPA Proposes Expansion of Risk Management Program Requirements, with Special Emphasis on Petroleum, Coal, and Chemical Manufacturers and Climate Risks
The U.S. Environmental Protection Agency (“EPA”) has proposed substantial changes to its Risk Management Program (“RMP”) regulations aimed at preventing chemical facility accidents, a move that will affect industrial facilities that handle threshold amounts of regulated chemicals. The proposal would reinstate requirements from an Obama administration RMP rule reversed by the Trump administration, as well as impose new requirements going beyond the Obama administration rule. The latest proposal includes new requirements for hazard analysis, including requirements related to considering risks posed by climate change and power loss; third-party auditing; incident investigations and root cause analysis; and public sharing of chemical and process information. This note highlights key elements of the proposed rule. Comments on the proposal must be submitted by October 31, 2022.
- Natural hazards, power loss, and facility siting
The proposed rule would make explicit that natural hazards (including those resulting from climate change), loss of power, and proximity to communities must be included in hazard reviews and process hazard analyses (“PHA”) for Program 2 and Program 3 RMP-regulated processes. Such reviews and analyses would also be required to specifically address standby or emergency power systems. Standby or backup power would be required for air pollution control or monitoring equipment associated with prevention and detection of accidental releases. Facilities would be required to list in their risk management plans the recommendations from their natural hazard, loss of power, and siting evaluations that were not adopted and the justification for those decisions.
The proposal is particularly noteworthy in its emphasis on, and approach to, climate-related risk. EPA cites historical RMP data regarding exposure to natural hazards, finding that between 2000 and 2020 over 90% of counties with RMP facilities experienced flooding and 1 in 4 counties with RMP facilities have experienced hurricanes. EPA also notes that new studies show that natural hazard risks are increasing, specifically noting a report prepared by environmental groups that finds “one-third of RMP facilities are at risk of climate-related events, such as wildfire, flooding, hurricane storm surge, and/or coastal flooding.” EPA proposes that facilities must utilize “all available resources” to identify and evaluate risk of climate-related events. EPA also requests comment on whether, in the alternative, it should designate geographic areas most at risk from climate or other natural events, primarily by adopting the list of areas exposed to heightened risk of wildfire, flooding, storm surge, or coastal flooding in the report prepared by environmental groups. Over 3,800 RMP facilities across the country are located in these areas, according to the report. Should EPA designate areas with high climate risk, EPA asks whether facilities should be required to evaluate climate risks during hazard evaluations only if located in such designated areas.
- Safer technologies and alternatives analysis
Facilities with Program 3 processes in North American Industry Classification System (“NAICS”) codes 324 (petroleum and coal products manufacturing) and 325 (chemical manufacturing) located within one mile of another RMP‑regulated facility with processes in these same NAICS codes (324 and 325) must conduct a safer technology and alternatives analysis (“STAA”) and identify the practicability of inherently safer technology as part of PHAs. EPA also proposes that all facilities with processes in NAICS code 324 using hydrofluoric acid (“HF”) in an alkylation unit consider safer alternatives to HF alkylation. Risk management plans would be required to include justification for the rejection of any STAA recommendations.
- Enhanced information availability for fenceline communities
Facilities would be required to provide chemical hazard information upon request to residents living within six miles of the facility. EPA believes the proposed six-mile radius would adequately address the potential security risk of allowing anonymous confidential access to any member of the public, a risk that was of concern to the Trump administration.
- Employee participation
The proposal would impose new employee participation requirements in resolving PHA, compliance audit, and incident investigation recommendations and findings. Additionally, the proposal requires Program 3 employee participation plans to, when there is risk of a catastrophic release, provide employees authority to: (i) refuse to perform a task; (ii) recommend to the operator in charge of a unit that an operation or process be shut down; and (iii) allow an operator in charge to partially or completely shut down an operation or process. The proposal would require both Program 2 and Program 3 employee participation plans to include mechanisms for anonymously reporting accidental releases or potential RMP non-compliance.
- Root cause analysis and third-party audits
EPA proposes requiring a formal root cause analysis incident investigation within 12 months of an RMP-reportable accident, as defined under 40 C.F.R. § 68.42. Such root cause analyses must include specific elements and use a recognized investigation method.
In addition to the compliance audits required every three years under existing regulations, EPA proposes to require third-party compliance audits when: (a) a facility experiences two RMP-reportable accidents within five years; (b) a facility experiences one RMP-reportable accident within five years by a facility with a Program 3 process classified under NAICS code 324 or 325 within one mile of another RMP-regulated facility that also has a process classified under NAICS code 324 or 325; or (c) EPA otherwise determines an independent audit is necessary. The proposal would require providing justification in the risk management plan when third-party compliance audit recommendations are not adopted.
Regulated sources would have to comply with most of the proposal’s requirements, including the above requirements, within three years of the final rule’s effective date. Facilities would have four years after the final rule’s effective date to update and resubmit risk management plans to reflect the proposal’s new requirements.
The regulatory ping pong is continuing as the Biden administration seeks to reinstate many requirements reversed by the Trump administration. Even with the proposal moving to reinstate many requirements, some environmental groups have already decried the proposal for not going far enough and have promised to push for additional requirements, including mandatory fenceline monitoring, expanded prevention requirements, and additional information disclosure. Meanwhile, industry groups have warned that the proposal imposes misinformed changes and that the proposed rule’s costs will outweigh its benefits given EPA data showing RMP incidents have declined nearly 75 percent over the past several decades.
EPA’s proposal to require evaluation of climate-related risks reflects the Biden administration’s ongoing efforts to implement Executive Order 13990’s directive that federal agencies review and revise existing regulations to enhance climate resilience. The proposed revisions to the RMP rule follow other proposed actions to heighten the focus on assessment of physical climate risks, including notably the SEC’s Proposed Climate Disclosure Rule. In that Rule, the SEC has proposed that public companies assess exposure to physical climate risks at the ZIP code level and disclose those risks where they are material. The RMP proposal is further evidence that the Biden administration will require increasingly granular physical risk assessments at a variety of scales with the aim of enhancing climate resilience.
In light of the October 31, 2022 comments deadline, companies subject to the RMP should promptly review the proposal to assess impacts on their operations and determine if they should submit comments. Such comments are particularly important in shaping the administrative record that will drive the outcome of inevitable future legal challenges to any rule that is eventually adopted.1
1 Litigation challenging the 2017 Obama administration rule is being held in abeyance pending resolution of litigation challenging the 2019 Trump administration rule, which itself is being held in abeyance until October 3, 2022. Given this history, it seems nearly inevitable that any rule the Biden administration finalizes will be challenged.
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.