- EPA's New RMP Modernization Rule May Result in Legal Challenges
- August 4, 2016 | Author: Juan J. Miranda
- Law Firm: Taylor, Porter, Brooks & Phillips, L.L.P. - Baton Rouge Office
In the coming weeks, the U.S. Environmental Protection Agency (EPA) will release its Risk Management Plan (RMP) Modernization Rule, which applies to all stationary sources with processes that contain more than a threshold quantity of a regulated substance. The proposed rule stems from President Obama’s issuance of Executive Order 13650 (Improving Chemical Facility Safety and Security) following several catastrophic chemical facility incidents in the United States, most notably West, Texas. The order sought to reduce risks associated with hazardous chemicals to owners and operators, workers, and communities by enhancing the safety and security of chemical facilities. The rule will result in significant changes to the RMP, 40 C.F.R. § 68 et seq., which implements Section 112(r) of the Clean Air Act.
Applicability of the RMP Modernization Rule depends upon the process program level. Under the RMP regulations, covered processes fall within one of three prevention program levels based on the potential for offsite consequences, accident history, and regulations under OSHA’s Process Safety Management. Program 1 applies to those processes that would not affect the public in the event of a worst case release and that have not had accidents with offsite consequences in the last five years. Program 2 applies to those processes not eligible for Program 1, but not subject to Program 3. Program 3 applies to those processes subject to OSHA’s PSM or fall within one of the ten specified NAICS codes. The new rule will implement the following changes for these programs (designated as P1, P2 and P3):
Third-party Audits (applies to the next scheduled audit after an accident)
Incident Root Cause Analysis (within 12 months for facilities with accidents/near misses that resulted in or could have resulted in catastrophic release)
Safer Alternatives Analysis (applies to a subset of P3 in certain NAICS codes)
Coordinating Emergency Response Program Requirements with Local Responders (coordinate annually with LEPC/emergency responders and ensure capabilities exist; document coordination)
Emergency Response Exercises (annual notification exercise; field exercise every 5 years and tabletop exercises in interim years; document exercises)
Information Sharing (makes public incident investigation reports with root cause analyses; drill exercise reports; compliance audits; accident history)
The EPA itself has described the changes as a “clarification” of existing requirements. However, the changes have the potential to greatly increase the number of incidents requiring formal investigations. In light of the significant substantive changes to the RMP Rule, it is anticipated that there will be legal challenges to the new rule.
Under the new rule, third-party audits are required after any recordable accident or an agency finding of significant non-compliance with RMP rules (triggering events). The auditor must not be associated with the regulated facility and must not have worked at the regulated facility within the last three years. In addition, the third-party auditor must have at least one member licensed as a Professional Engineer. The audit must be completed within twelve months following the triggering event. Significantly, the rule prohibits claiming audit reports and related records as attorney-client communications or attorney work-product even if the auditors are managed by attorneys (the prohibition also applies to Root Cause Analyses).
The third-party audit requirement could be met with the following types of legal arguments and challenges:
- The Clean Air Act does not authorize the EPA to outsource its enforcement authority. By requiring third-party audits following a triggering event, has EPA essentially delegated its enforcement authority to industry? It could be argued that there is a lack of statutory authority to delegate enforcement authority to industry.
- By declaring that audit reports are not subject to attorney-client communication or attorney work-product privileges, is the proposed rule in contravention of the Federal Rules of Civil Procedure and Federal Rules of Evidence? Considering the nature of the triggering events, audit reports are likely prepared in anticipation of litigation. Such information, when prepared at the direction of an attorney, is typically subject to work-product and attorney communication protections.
- The prohibition will leave regulated facilities with no options to protect confidential business information, such as trade secrets. It may be argued that the EPA’s blanket prohibition against attorney-client privileges is overly broad and violates federal rules.
- Whether the new rule potentially violates the Anti-Deficiency Act, which prohibits federal agencies from making expenditures in excess of amounts available in appropriations. Because of EPA’s limited resources, the agency itself may be unable to enforce the expansive requirements of the new rule. By requiring third-party audits, has EPA delegated enforcement authority to industry and thereby bypassed the Anti-Deficiency Act? Considering that the Clean Air Act does not authorize the EPA to outsource its enforcement authority, it is anticipated that the new rule will be challenged for violation the Anti-Deficiency Act.
- Lack of authority to regulate incidents that have no offsite consequence - When risks from an accidental release are limited to workers present on-site, that release falls solely under OSHA’s authority under PSM. By proposing to define a “catastrophic release” to cover impacts that occur exclusively onsite, has EPA encroached into OSHA’s jurisdiction without statutory authority to do so?
- Failure to coordinate with OSHA in promulgating the new rule as required by Section 112(r)(7)(D) of the Clean Air Act (42 U.S.C.A. § 7412(r)(7)(D))
- Violations of Chemical Facility Anti-Terrorism Standards (“CFATS”) and Chemical Safety Information, Site Security and Fuels Regulatory Relief Act - Does the EPA’s proposed public disclosure requirement create security risks? Commentators have suggested that public dissemination of accident history reports, procedure for informing accidental release, and reports from emergency response exercises could give terrorist insight into how to create a release and prevent response to the release.
- Inadequate regulatory impact analysis - Has EPA failed to conduct an appropriate cost benefit analysis for the proposed rule, and does the expected monetized cost of the proposed rule exceed the monetized benefits? Has EPA erroneously included on-site releases with no offsite damages in its analysis?
- Lack of adequate notice, vagueness, reasonableness, and mischaracterization of the Rule.
For more information on the RMP Modernization Rule, please visit: