[Federal Register Volume 85, Number 35 (Friday, February 21, 2020)]
[Proposed Rules]
[Pages 10128-10146]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-03401]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 320

[EPA-HQ-OLEM-2019-0086; FRL-10005-53-OLEM]
RIN 2050-AH05


Financial Responsibility Requirements Under CERCLA Section 108(b) 
for Facilities in the Chemical Manufacturing Industry

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The Environmental Protection Agency (EPA or the Agency) is 
proposing to not impose financial responsibility requirements for 
facilities in the Chemical Manufacturing industry under Section 108(b) 
of the Comprehensive Environmental Response, Compensation, and 
Liability Act (CERCLA). Section 108(b) addresses the promulgation of 
regulations that require classes of facilities to 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.

DATES: Comments must be received on or before April 21, 2020.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ- 
SFUND-2019-0086, at http://www.regulations.gov. Follow the online 
instructions for submitting comments. Once submitted, comments cannot 
be edited or removed from Regulations.gov. EPA may publish any comment 
received to its public docket. Do not submit electronically any 
information you consider to be Confidential Business Information (CBI) 
or other information whose disclosure is restricted by statute. 
Multimedia submissions (audio, video, etc.) must be accompanied by a 
written comment. The written comment is considered the official comment 
and should include discussion of all points you wish to make. EPA will 
generally not consider comments or comment contents located outside of 
the primary submission (i.e., on the Web, cloud, or other file sharing 
system). For additional submission methods, the full EPA public comment 
policy, information about CBI or multimedia submissions, and general 
guidance on making effective comments, please visit http://www2.epa.gov/dockets/commenting-epa-dockets.

FOR FURTHER INFORMATION CONTACT: For more information on this document, 
contact Charlotte Mooney, U.S. Environmental Protection Agency, Office 
of Resource Conservation and Recovery, Mail Code 5303P, 1200 
Pennsylvania Ave. NW, Washington, DC 20460; telephone (703) 308-7025 or 
(email) mooney.charlotte@epa.gov.

SUPPLEMENTARY INFORMATION: 

How can I get copies of this document and other related information?

    This Federal Register proposed rule and supporting documentation 
are available in a docket EPA has established for this action under 
Docket ID No. EPA-HQ-OLEM-2019-0086. All documents in the docket are 
listed in the http://www.regulations.gov index. Although listed in the 
index, some information is not publicly available, e.g., Confidential 
Business Information (CBI) or other information whose disclosure is 
restricted by statute. Certain other material, such as copyrighted 
material, will be publicly available only in hard copy. Publicly 
available docket materials are available either electronically at 
http://www.regulations.gov or in hard copy at EPA/DC, WJC West, Room 
3334, 1301 Constitution Ave. NW, Washington, DC 20460. This Docket 
Facility is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, 
excluding legal holidays. The Docket Facility telephone number is (202) 
566-0276. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., 
Monday through Friday, excluding legal holidays. The telephone number 
for the Public Reading Room is (202) 566-1744.

Table of Contents

I. Executive Summary
    A. Overview
    B. Purpose of This Action
    C. Summary of the Major Provisions of the Regulatory Action
    D. Costs and Benefits of the Regulatory Action
II. Authority
III. Background Information
    A. Overview of Section 108(b) and other CERCLA Provisions
    B. History of Section 108(b) Rulemakings
    1. 2009 Identification of Priority Classes of Facilities for 
Development of CERCLA Section 108(b) Financial Responsibility 
Requirements
    2. Additional Classes 2010 Advance Notice of Proposed Rulemaking
    3. 2014 Petition for Writ of Mandamus
    4. Additional Classes 2017 Notice of Intent To Proceed With 
Rulemakings
IV. Statutory Interpretation
V. Approach To Developing This Proposed Rule
VI. Chemical Manufacturing Industry Overview
    A. Identification of Chemical Manufacturing Industry
    B. Overview of Current Industry Operation
    C. Industry Economic Profile
VII. Discussion of Cleanup Sites Analysis
    A. Cleanup Site Evaluations
    B. Role of Federal and State Programs and Voluntary Protective 
Industry Practices at Facilities in the Chemical Manufacturing 
Industry
    C. Existing State and Federal Financial Responsibility Programs
    D. Compliance and Enforcement History
VIII. Decision to Not Propose Requirements
    A. Solicitation of Public Comment on This Proposal
IX. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and 
Executive Order 13563: Improving Regulation and Regulatory Review
    B. Executive Order 13771: Reducing Regulation and Controlling 
Regulatory Costs
    C. Paperwork Reduction Act (PRA)
    D. Regulatory Flexibility Act (RFA)
    E. Unfunded Mandates Reform Act (UMRA)
    F. Executive Order 13132: Federalism
    G. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments
    H. Executive Order 13045: Protection of Children From 
Environmental Health and Safety Risks
    I. Executive Order 13211: Actions That Significantly Affect 
Energy Supply, Distribution, or Use
    J. National Technology Transfer and Advancement Act
    K. Executive Order 12898: Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations

I. Executive Summary

A. Overview

    Section 108(b) of the Comprehensive Environmental Response, 
Compensation, and Liability Act (CERCLA) directs EPA to develop 
regulations that require classes of

[[Page 10129]]

facilities to 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. The statute further requires that the 
level of financial responsibility be established to protect against the 
level of risk that the President, in his discretion, believes is 
appropriate, based on factors including the payment experience of the 
Hazardous Substance Superfund (Fund). The President's authority under 
this section for non-transportation-related facilities has been 
delegated to the EPA Administrator.
    This proposal is based on EPA's interpretation of the statute and 
analysis of its record developed for this rulemaking.\1\ EPA has 
analyzed the need for financial responsibility based on risk of 
taxpayer funded cleanups at facilities in the Chemical Manufacturing 
Industry operating under modern management practices and modern 
environmental regulations, i.e., the type of facilities to which 
financial responsibility regulations would apply.
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    \1\ EPA's interpretation of the statute was upheld by the D.C. 
Circuit in Idaho Conservation League v. Wheeler, No. 18-1141, slip 
op. at 9-12 (D.C. Cir. July 19, 2019).
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    That risk is identified by examining the management of hazardous 
substances at such facilities, as well as by examining Federal and 
state regulatory controls on that management and Federal and state 
financial responsibility requirements.
    Based on that examination, EPA is proposing that, in the context of 
CERCLA section 108(b), the degree and duration of risk associated with 
the modern production, transportation, treatment, storage or disposal 
of hazardous substances by the Chemical Manufacturing Industry does not 
present a level of risk of taxpayer funded response actions that 
warrant imposition of financial responsibility requirements for this 
sector.
    In August 2014, the Idaho Conservation League, Earthworks, Sierra 
Club, Amigos Bravos, Great Basin Resource Watch, and Communities for a 
Better Environment filed a lawsuit in the U.S. Court of Appeals for the 
District of Columbia Circuit, seeking a writ of mandamus requiring 
issuance of CERCLA Section 108(b) financial responsibility rules for 
the hardrock mining industry, and for the three additional industries 
identified by EPA in the 2010 Advance Notice of Proposed Rulemaking 
(ANPRM),\2\ that is, Chemical Manufacturing; Petroleum and Coal 
Products Manufacturing; and Electric Power Generation, Transmission, 
and Distribution. Following oral arguments, EPA and the petitioners 
submitted a Joint Motion for an order on Consent, filed on August 31, 
2015, which included a schedule for further administrative proceedings 
under CERCLA Section 108(b). The court order granting the motion was 
issued on January 29, 2016. A copy of the order can be found in the 
docket for this rulemaking.
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    \2\ 75 FR 816 (Jan. 6, 2010).
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    In addition to requiring EPA to publish a proposed rule on hardrock 
mining financial requirements by December 1, 2016, the January 2016 
order required EPA to sign for publication in the Federal Register a 
determination whether EPA will issue a notice of proposed rulemaking on 
financial assurance requirements under Section 108(b) in the (a) 
chemical manufacturing industry; (b) petroleum and coal products 
manufacturing industry; and (c) electric power generation, 
transmission, and distribution industry by December 1, 2016. EPA signed 
the required determination on December 1, 2016; the notice was 
published on January 11, 2017 \3\ and announced EPA's intent to proceed 
with rulemakings for all three of the classes.
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    \3\ 82 FR 3512 (Jan. 11, 2017).
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B. Purpose of This Action

    The purpose of this action is to propose that financial 
responsibility requirements under CERCLA Section 108(b) at facilities 
in the Chemical Manufacturing industry are not necessary and to solicit 
comments on this proposal. EPA has reached this conclusion based on the 
analyses described in Parts VI and VII of this proposal. The evidence 
provided in these analyses contributed to EPA's proposed finding that 
the degree and duration of risk posed by the Chemical Manufacturing 
industry does not warrant financial responsibility requirements under 
CERCLA Section 108(b).
    The analysis and proposed finding in this proposal are not 
applicable to and do not affect, limit, or restrict EPA's authority (1) 
to take a response action or enforcement action under CERCLA with 
respect to any facility in the Chemical Manufacturing industry, 
including any currently operating facilities or those described in this 
proposal and in the background documents for this proposal, and (2) to 
include requirements for financial responsibility as part of such 
response action. The set of facts in the rulemaking record related to 
the individual facilities discussed in this proposed rulemaking support 
the Agency's proposal not to issue financial responsibility 
requirements under Section 108(b) for this class. At the same time, a 
different set of facts could demonstrate a need for a CERCLA response 
action at an individual site. This proposed rulemaking also does not 
affect the Agency's authority under other authorities that may apply to 
individual facilities, such as the Clean Air Act (CAA), the Clean Water 
Act (CWA), the Resource Conservation and Recovery Act (RCRA), and the 
Toxic Substances Control Act (TSCA).

C. Summary of the Major Provisions of the Regulatory Action

    EPA is proposing to not require evidence of financial 
responsibility under CERCLA Section 108(b) at facilities in the 
Chemical Manufacturing industry. Thus, there are no proposed regulatory 
provisions associated with this action.

D. Costs and Benefits of the Regulatory Action

    EPA is proposing to not require evidence of financial 
responsibility under CERCLA Section 108(b) at facilities in the 
Chemical Manufacturing industry. EPA, therefore, has not conducted a 
Regulatory Impact Analysis for this action.

II. Authority

    This proposed rule is issued under the authority of Sections 101, 
104, 108 and 115 of the Comprehensive Environmental Response, 
Compensation, and Liability Act of 1980, as amended, 42 U.S.C 9601, 
9604, 9608 and 9615, and Executive Order 12580 (52 FR 2923, January 29, 
1987).

III. Background Information

A. Overview of Section 108(b) and Other CERCLA Provisions

    CERCLA, as amended by the Superfund Amendments and Reauthorization 
Act of 1986 (SARA), establishes a comprehensive environmental response 
and cleanup program. Generally, CERCLA authorizes EPA \4\ to undertake 
removal or remedial actions in response to any release or threatened 
release into the environment of ``hazardous substances'' or, in some 
circumstances, any other ``pollutant or

[[Page 10130]]

contaminant.'' As defined in CERCLA Section 101, removal actions 
include actions to ``prevent, minimize, or mitigate damage to the 
public health or welfare or to the environment,'' and remedial actions 
are ``actions consistent with [a] permanent remedy[.]'' Remedial and 
removal actions are jointly referred to as ``response actions.'' CERCLA 
Section 111 authorizes the use of the Hazardous Substance Superfund 
established under title 26, United States Code, to finance response 
actions undertaken by EPA. In addition, CERCLA Section 106 gives EPA 
\5\ authority to compel action by liable parties in response to a 
release or threatened release of a hazardous substance that may pose an 
``imminent and substantial endangerment'' to public health or welfare 
or the environment.
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    \4\ Although Congress conferred the authority for administering 
CERCLA on the President, most of that authority has since been 
delegated to EPA. See Exec. Order No. 12580, 52 FR 2923 (Jan. 23, 
1987). The executive order also delegates to other Federal agencies 
specified CERCLA response authorities at certain facilities under 
those agencies' ``jurisdiction, custody or control.''
    \5\ CERCLA Sections 106 authority is also delegated to other 
Federal agencies in certain circumstances. See Exec. Order No. 
13016, 61 FR 45871 (Aug. 28, 1996).
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    CERCLA Section 107 imposes liability for response costs on a 
variety of parties, including certain past owners and operators, 
current owners and operators, and certain generators, arrangers, and 
transporters of hazardous substances. Such parties are liable for 
certain costs and damages, including all costs of removal or remedial 
action incurred by the Federal Government, so long as the costs 
incurred are ``not inconsistent with the national contingency plan'' 
(the National Oil and Hazardous Substances Pollution Contingency Plan 
or NCP).\6\ Section 107 also imposes liability for natural resource 
damages and health assessment costs.\7\
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    \6\ CERCLA Section 107 (a)(4)(A).
    \7\ CERCLA Section 107 (a)(4)(C)-(D).
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    Section 108(b) establishes authority to require owners and 
operators of classes of facilities to establish and maintain evidence 
of financial responsibility. Section 108(b)(1) directs EPA to develop 
regulations requiring owners and operators of facilities to establish 
evidence of financial responsibility ``consistent with the degree and 
duration of risk associated with the production, transportation, 
treatment, storage, or disposal of hazardous substances.'' In turn, 
Section 108(b)(2) directs that the level of financial responsibility 
shall be initially established, and, when necessary, adjusted to 
protect against the level of risk that EPA in its discretion believes 
is appropriate based on the payment experience of the Fund, commercial 
insurers, court settlements and judgments, and voluntary claims 
satisfaction. Section 108(b)(2) does not, however, preclude EPA from 
considering other factors in addition to those specifically listed. The 
statute prohibited promulgation of such regulations before December 
1985.
    In addition, Section 108(b)(1) provides for publication within 
three years of the date of enactment of CERCLA of a ``priority notice'' 
identifying the classes of facilities for which EPA would first develop 
financial responsibility requirements. It also directs that priority in 
the development of requirements shall be accorded to those classes of 
facilities, owners, and operators that present the highest level of 
risk of injury.

B. History of Section 108(b) Rulemakings

1. 2009 Identification of Priority Classes of Facilities for 
Development of CERCLA Section 108(b) Financial Responsibility 
Requirements
    On March 11, 2008, Sierra Club, Great Basin Resource Watch, Amigos 
Bravos, and Idaho Conservation League filed suit in the U.S. District 
Court for the Northern District of California against then EPA 
Administrator Stephen Johnson and then Secretary of the U.S. Department 
of Transportation Mary E. Peters. Sierra Club, et al. v. Johnson, No. 
08-01409 (N. D. Cal.). On February 25, 2009, that court ordered EPA to 
publish the Priority Notice required by CERCLA Section 108(b)(1) later 
that year. The 2009 Priority Notice and supporting documentation 
presented the Agency's conclusion that hardrock mining facilities would 
be the first class of facilities for which EPA would issue CERCLA 
Section 108(b) requirements.\8\ Additionally, the 2009 Priority Notice 
stated EPA's view that classes of facilities outside of the hardrock 
mining industry may warrant the development of financial responsibility 
requirements.\9\ The Agency committed to gather and analyze data on 
additional classes of facilities and to consider them for possible 
regulation. The court later dismissed the remaining claims.
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    \8\ 74 FR 37214 (July 28, 2009).
    \9\ Id. at 37218.
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2. Additional Classes 2010 Advance Notice of Proposed Rulemaking
    On January 6, 2010, EPA published an Advance Notice of Proposed 
Rulemaking (ANPRM),\10\ in which the Agency identified three additional 
industrial sectors for the development, as necessary, of proposed 
Section 108(b) regulation. To develop the list of additional classes 
for the 2010 ANPRM, EPA used information from the CERCLA National 
Priorities List (NPL) and analyzed data from the RCRA Biennial Report 
(BR) and the Toxics Release Inventory (TRI).
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    \10\ 75 FR 816 (Jan. 6, 2010).
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    EPA specifically requested public comment in the 2010 ANPRM on 
whether to propose a regulation under CERCLA Section 108(b) for each of 
the three industries, or any class or classes within those industries, 
including information demonstrating why such financial responsibility 
requirements would or would not be appropriate for those particular 
classes. In addition, the Agency requested information related to the 
industry categories discussed in the ANPRM, including data on facility 
operations, information on past and expected future environmental 
response actions, use of financial responsibility mechanisms by the 
industry categories, existing financial responsibility requirements, 
and other information the Agency might consider in setting financial 
responsibility levels. Finally, EPA requested information from the 
insurance and financial sectors related to instrument availability and 
implementation, and to potential instrument conditions.\11\ Comments 
received on the ANPRM are summarized in the Additional Classes 2017 
Notice of Intent to Proceed with Rulemakings, section III.B.4 below.
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    \11\ 75 FR 816, 830-831 (Jan. 6, 2010).
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3. 2014 Petition for Writ of Mandamus
    In August 2014, the Idaho Conservation League, Earthworks, Sierra 
Club, Amigos Bravos, Great Basin Resource Watch, and Communities for a 
Better Environment filed a new lawsuit in the U.S. Court of Appeals for 
the District of Columbia Circuit, seeking a writ of mandamus requiring 
issuance of CERCLA Section 108(b) financial assurance rules for the 
hardrock mining industry and for three other industries: Chemical 
manufacturing; petroleum and coal products manufacturing; and electric 
power generation, transmission, and distribution. Thirteen companies 
and organizations representing business interests in the hardrock 
mining and other sectors sought to intervene in the case.
    Following oral argument, the court issued an order in May 2015 
requiring the parties to submit, among other things, supplemental 
submissions addressing a schedule for further administrative 
proceedings under CERCLA Section 108(b). Petitioners and EPA requested 
an order from the court with a schedule calling for the Agency to sign 
a proposed rule for the hardrock mining industry by December 1, 2016, 
and a final rule by December 1, 2017. The joint motion also included a

[[Page 10131]]

requested schedule for the additional industry classes, which called 
for EPA to sign by December 1, 2016, a determination on whether EPA 
would issue a notice of proposed rulemaking for classes of facilities 
in any or all of the other industries, and a schedule for proposed and 
final rules for the additional industry classes as follows:

    EPA will sign for publication in the Federal Register a notice 
of proposed rulemaking in the first additional industry by July 2, 
2019, and sign for publication in the Federal Register a notice of 
its final action by December 2, 2020.
    EPA will sign for publication in the Federal Register a notice 
of proposed rulemaking in the second additional industry by December 
4, 2019, and sign for publication in the Federal Register a notice 
of its final action by December 1, 2021.
    EPA will sign for publication in the Federal Register a notice 
of proposed rulemaking in the third additional industry by December 
1, 2022, and sign for publication in the Federal Register a notice 
of its final action by December 4, 2024.\12\
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    \12\ In Re: Idaho Conservation League, No. 14-1149 (D.C. Cir. 
Jan. 29, 2016) (order granting joint motion).

    While the joint motion identified the three additional industries 
as the Chemical Manufacturing industry, the Petroleum and Coal Products 
Manufacturing industry, and the Electric Power Generation, Transmission 
and Distribution industry, and set a rulemaking schedule, the motion 
did not indicate which industry would be the first, second or third. 
The Joint Motion specified that it did not alter the Agency's 
discretion as provided by CERCLA and administrative law.\13\
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    \13\ See Joint Motion at 6 (``Nothing in this Joint Motion 
should be construed to limit or modify the discretion accorded EPA 
by CERCLA or the general principles of administrative law.'')
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    On January 29, 2016, the court granted the joint motion and issued 
an order that mirrored the submitted schedule in substance. The order 
did not mandate any specific outcome of the rulemakings.\14\ The court 
order can be found in the docket for this rulemaking. The signing of 
this proposed rule by December 1, 2022, will satisfy one component of 
the court order.
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    \14\ In granting the Joint Motion, the court expressly stated 
that its order ``merely requires that EPA conduct a rulemaking and 
then decide whether to promulgate a new rule--the content of which 
is not in any way dictated by the [order].'' In re Idaho 
Conservation League, at 17 (quoting Defenders of Wildlife v. 
Perciasepe, 714 F.3d 1317, 1324 (D.C. Cir. 2013).
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4. Additional Classes 2017 Notice of Intent To Proceed With Rulemakings
    Consistent with the January 2016 court order, EPA signed on 
December 1, 2016, a determination regarding rulemakings for the 
additional classes--a Notice of Intent to Proceed with Rulemakings for 
all three of the classes. The notice was published in the Federal 
Register on January 11, 2017.\15\
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    \15\ 82 FR 3512 (Jan. 11, 2017).
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    The notice formally announced EPA's intention to move forward with 
the regulatory process and to publish a notice of proposed rulemaking 
for classes of facilities within the three industries identified in the 
2010 ANPRM. The announcement in the notice was not a determination that 
requirements were necessary for any or all of the classes of facilities 
within the three industries, or that EPA would propose such 
requirements. In addition, the notice gave an overview of some of the 
comments received on the 2010 ANPRM and initial responses to those 
comments. The comments on the ANPRM which specifically addressed the 
need for CERCLA Section 108(b) regulation for the three additional 
classes fell into four categories: (1) Other laws with which the 
industry complies that obviate the need for CERCLA Section 108(b) 
regulation; (2) the sources of data that EPA used to select the 
industries; (3) past versus current practices within each industry; and 
(4) the overall need for financial responsibility for each industry. In 
discussing the ANPRM comments in the 2017 notice, the Agency stated its 
intent to use other, more industry-specific and more current sources of 
data to identify risk; to consider site factors that reduce risks, 
including those that result from compliance with other regulatory 
requirements; and to develop a regulatory proposal for each rulemaking.
    At the time of the 2017 notice, EPA had not identified sufficient 
evidence to determine that the rulemaking process was not warranted, 
nor had EPA identified sufficient evidence to establish CERCLA Section 
108(b) requirements. The notice described a process to gather and 
analyze additional information to support the Agency's ultimate 
decision, including further evaluation of the classes of facilities 
within the three industry sectors. The notice stated that EPA would 
decide whether proposing requirements was necessary and, accordingly, 
that EPA would propose appropriate requirements or would propose not to 
impose requirements.
5. CERCLA Section 108(b) Proposal for Facilities in the Electric Power 
Generation, Transmission, and Distribution Industry
    On July 29, 2019, EPA published a notice of proposed rulemaking on 
the first of the three additional industries. In that notice, the 
Agency proposed to not impose financial responsibility requirements for 
the Electric Power Generation, Transmission, and Distribution industry 
and described the analyses and results that were used to reach that 
decision. The court's January 2016 order requires that a final action 
on the first additional industry be signed by December 2, 2020.\16\
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    \16\ 84 FR 36535 (Jul. 29, 2019).
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IV. Statutory Interpretation

    CERCLA Section 108(b) provides general instructions on how to 
determine what financial responsibility requirements to impose for a 
particular class of facility. Section 108(b)(1) directs EPA to develop 
regulations requiring owners and operators of facilities to establish 
evidence of financial responsibility ``consistent with the degree and 
duration of risk associated with the production, transportation, 
treatment, storage, or disposal of hazardous substances.'' Section 
108(b)(2) directs that the ``level of financial responsibility shall be 
initially established and, when necessary, adjusted to protect against 
the level of risk'' that EPA ``believes is appropriate based on the 
payment experience of the Fund, commercial insurers, courts settlements 
and judgments, and voluntary claims satisfaction.'' EPA interprets the 
risk to be addressed by financial assurance under Section 108(b) to be 
the risk of the need for taxpayer financed response actions. Read 
together, the statutory language on determining the degree and duration 
of risk and on setting the level of financial responsibility confers a 
significant amount of discretion on EPA.
    Section 108(b)(1) directs EPA to evaluate risk from a selected 
class of facilities, but it does not suggest that a precise calculation 
of risk is either necessary or feasible. Although the cost of response 
associated with a particular site can be ascertained only once a 
response action is required, any financial responsibility requirements 
imposed under Section 108(b) would be imposed before any such response 
action was identified. The statute thus necessarily confers on EPA wide 
latitude to determine, in a Section 108(b) rulemaking proceeding, what

[[Page 10132]]

degree and duration of risk are presented by the identified class.
    Section 108(b)(2) in turn directs that EPA establish the level of 
financial responsibility that EPA in its discretion believes is 
appropriate to protect against the risk. This statutory direction does 
not specify a methodology for the evaluation. Rather, this decision is 
committed to the discretion of the EPA Administrator. While the statute 
provides a list of information sources on which EPA is to base its 
decision--the payment experience of the Superfund, commercial insurers, 
courts settlements and judgments, and voluntary claims satisfaction--
the statute does not indicate that this list of factors is exclusive, 
nor does it specify how the information from these sources is to be 
used, such as by indicating how these categories are to be weighted 
relative to one another.
    EPA believes that sections 108(b)(1) and (b)(2) are sufficiently 
interrelated that it is appropriate to evaluate the degree and duration 
of risk under subsection (b)(1) by considering the factors enumerated 
in subsection (b)(2). EPA therefore concludes that Congress intended 
the risk associated with a particular class of facilities to mean the 
risk of future Fund-financed cleanup actions in that industry. This 
reading is supported by the structure of the statute, as Section 108(b) 
appears between two provisions related to cost recovery. Section 
108(a), concerning financial assurance requirements for certain 
vessels, refers specifically to cleanup costs. And Section 108(c), 
concerning recovery of costs from guarantors who provide the financial 
responsibility instruments, refers specifically to liability for 
cleanup costs. EPA thus reads ``risk'' in Section 108(b) consistent 
with its meaning in sections 108(a) and (c); that is, the risk of Fund-
financed cleanup. EPA adopted this interpretation in assessing the need 
for financial responsibility requirements under CERCLA Section 108(b) 
for facilities in the first class of facilities it evaluated: The 
Hardrock Mining industry.\17\ In its opinion deciding the challenge to 
the Final Action for the Hardrock Mining industry, the U.S. Court of 
Appeals for the District of Columbia Circuit held that EPA's 
interpretation that the provisions of Section 108(b) ``relate only to 
ensuring against financial risks associated with cleanup costs,'' is 
reasonable and entitled to deference.\18\
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    \17\ 83 FR 7556, 7561-62 (Feb. 21, 2018).
    \18\ Idaho Conservation League v. Wheeler, No. 18-1141, slip op. 
at 12 (D.C. Cir. July 19, 2019).
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    For the Chemical Manufacturing industry, EPA has investigated the 
payment history of the Fund, and enforcement settlements and judgments, 
to evaluate, in the context of this CERCLA Section 108(b) rulemaking, 
the risk of a Fund-financed response action at facilities that would be 
subject to CERCLA financial responsibility requirements. The statute 
also authorizes EPA to consider the existence of Federal and state 
regulatory requirements, including any financial responsibility 
requirements. Section 108(b)(1) directs EPA to promulgate financial 
responsibility requirements ``in addition to those under subtitle C of 
the Solid Waste Disposal Act and other Federal law.'' According to the 
1980 Senate Report on legislation that was later enacted as CERCLA, 
Congress considered it appropriate for EPA to examine those additional 
requirements when evaluating the degree and duration of risk under what 
was later enacted as CERCLA Section 108(b):

    The bill requires also that facilities maintain evidence of 
financial responsibility consistent with the degree and duration of 
risks associated with the production, transportation, treatment, 
storage, and disposal of hazardous substances. These requirements 
are in addition to the financial responsibility requirements 
promulgated under the authority of Section 3004(6) of the Solid 
Waste Disposal Act. It is not the intention of the Committee that 
operators of facilities covered by Section 3004(6) of that Act be 
subject to two financial responsibility requirements for the same 
dangers.\19\
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    \19\ S. Rept. 96-848 (2d Sess, 96th Cong.), at 92.

    While the Senate Report mentions RCRA Section 3004(6) specifically, 
it is consistent with congressional intent for EPA to consider other 
potentially duplicative Federal financial responsibility requirements 
when examining the ``degree and duration of risk'' in the context of 
CERCLA Section 108(b) to determine whether and what financial 
responsibility requirements are appropriate. It is also consistent with 
congressional intent for EPA to consider state laws before imposing 
additional Federal financial responsibility requirements.
    Consideration of state laws before developing financial 
responsibility regulations is consistent with CERCLA Section 114(d), 
which prevents states from imposing financial responsibility 
requirements for liability for releases of the same hazardous 
substances after a facility is regulated under Section 108 of CERCLA. 
Just as Congress intended to prevent states from imposing duplicative 
financial assurance requirements after EPA had acted to impose such 
requirements under Section 108, it is reasonable to also conclude that 
Congress did not mean for EPA to disrupt existing state programs that 
are successfully regulating industrial operations to minimize risk, 
including the risk of taxpayer liability for response actions under 
CERCLA, and that specifically include appropriate financial assurance 
requirements under state law. Reviews of both state programs and other 
Federal programs help to identify whether and at what level there is 
current risk that is appropriate to address under CERCLA Section 108.
    EPA also believes that, when evaluating whether and at what level 
it is appropriate to require evidence of financial responsibility, EPA 
should examine information on Chemical Manufacturing facilities 
operating under modern conditions. In other words, EPA should assess 
the types of facilities to which any new financial responsibility 
regulations would apply. Financial responsibility requirements under 
Section 108(b) would not apply to legacy operations that are no longer 
operating. Rather, any requirements would apply to facilities that 
follow current industry practices and are subject to the modern 
regulatory framework (i.e., the regulations currently in place that 
apply to this industry). These modern conditions include state and 
Federal regulatory requirements and financial responsibility 
requirements that currently apply to operating facilities. This reading 
of Section 108(b) is consistent with statements in the legislative 
history of the statute. The1980 Senate Report states that the 
legislative language that became Section 108(b) ``requires those 
engaged in businesses involving hazardous substances to maintain 
evidence of financial responsibility commensurate with the risk which 
they present.'' \20\ This approach is also consistent with the analysis 
that EPA undertook, in developing its Final Action on Financial 
Responsibility Requirements Under CERCLA Section 108(b) for Classes of 
Facilities in the Hardrock Mining Industry.\21\ EPA's approach was 
recently upheld by the U.S. Court of Appeals for the District of 
Columbia Circuit.\22\
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    \20\ S. Rept. 96-848 (2d Sess, 96th Cong.), at 92.
    \21\ 83 FR 7556 (Feb. 21, 2018).
    \22\ Idaho Conservation League v. Wheeler, No. 18-1141 (D.C. 
Cir. July 19, 2019).
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    This statutory interpretation is reflected in today's proposal. Any 
financial responsibility requirements imposed under Section 108(b) 
would apply to currently operating facilities.

[[Page 10133]]

EPA thus sought to examine the extent to which hazardous substance 
management at currently operating Chemical Manufacturing facilities as 
a class continues to present risk. Moreover, the statutory direction to 
identify requirements consistent with identified risks guides EPA's 
interpretation that imposition of financial responsibility requirements 
under Section 108(b) would not be necessary for currently operating 
facilities that present minimal current risk of a Fund-financed 
response action. The interpretation in this proposal does not extend to 
any site-specific determinations of risk made in the context of 
individual CERCLA site responses. Those decisions will continue to be 
made in accordance with preexisting procedures.
    EPA thus examined records of releases of hazardous substances from 
facilities operating under a current regulatory framework and data on 
the actions taken and expenditures incurred in response to such 
releases. The data collected do not reflect historical practices, many 
of which would be illegal under current environmental laws and 
regulations. Instead, EPA has considered current Federal and state 
regulation of hazardous substance production, transportation, 
treatment, storage, or disposal applicable to facilities in the 
Chemical Manufacturing industry.

V. Approach To Developing This Proposed Rule

    Based on the statutory interpretation described above, EPA 
developed an analytical approach to determine whether the current risk 
under the modern regulatory framework within the Chemical Manufacturing 
industry rises to the level that warrants imposition of financial 
responsibility requirements under CERCLA Section 108(b). Specifically, 
EPA designed the analytical approach to determine the need for 
financial responsibility for this industry based on the degree and 
duration of risk of a Fund-financed response action associated with the 
industry's production, transportation, treatment, storage, or disposal 
of hazardous substances.
    The approach, described in detail below, looks at risks by 
examining records of releases of hazardous substances from facilities 
in the industry in combination with the payment history of the Fund and 
enforcement settlements and judgments. To enable EPA to base its 
decision on risk posed by facilities operating under modern conditions, 
i.e., the types of facilities to which financial responsibility 
requirements would apply, EPA developed an approach to identify and 
consider relevant state and Federal regulatory requirements and 
financial responsibility requirements that currently apply to operating 
facilities, as well as voluntary protective practices.
    EPA sought to determine the level of risk of a Fund-financed 
response action at current Chemical Manufacturing operations. Relevant 
to this decision are requirements of existing regulatory programs and 
voluntary practices, including existing financial responsibility 
requirements, which can reduce costs to the taxpayer; EPA's experience 
with cleanups in the Chemical Manufacturing industry; and enforcement 
actions, which may reduce the need for Federally-financed response 
action at facilities in the Chemical Manufacturing industry.
    As part of scoping the Chemical Manufacturing industry for this 
proposal, EPA sought to understand general characteristics of the 
industry that may be relevant to financial responsibility under Section 
108(b). To do this, EPA compiled industry features, including the types 
of activities undertaken and wastes handled or produced. Additionally, 
EPA looked at the financial condition of the industry to assess the 
ability of facilities in this class to pay for any environmental 
obligations they may incur. Discussion of these aspects of the industry 
is included in section VI of this proposal.
    Section VII.A describes EPA's evaluation of cleanup cases at 
facilities in the Chemical Manufacturing industry. So-called ``cleanup 
cases'' are sites in the Chemical Manufacturing industry where releases 
and cleanup actions occurred. To perform this evaluation EPA developed 
an analytic approach that considered cleanup cases to identify risk at 
currently operating facilities and where taxpayer funds were expended 
for response action. EPA first examined each site to determine the 
nature and timing of release. EPA used this information to determine if 
releases occurred under current regulations. As an initial screen, 
releases that occurred prior to 1980 were deemed to be legacy releases 
that occurred before the advent of the modern environmental regulatory 
framework and were therefore screened out of our analysis. Once EPA 
identified those sites with more recent releases occurring under a 
modern regulatory framework, EPA then focused on those response actions 
that were paid for by the taxpayer by looking at those sites with Fund-
financed cleanup activity.
    As described in section VII.B, to understand the modern regulatory 
framework applicable to currently operating facilities within the 
Chemical Manufacturing industry, EPA compiled applicable Federal and 
state regulations. Specifically, EPA looked to regulations that address 
the types of releases identified in the cleanup cases. This review also 
considered industry voluntary programs that could reduce risk of 
releases. EPA also identified financial responsibility regulations that 
apply to facilities in the Chemical Manufacturing industry in section 
VII.C, and compliance and enforcement history for the relevant 
regulations in section VII.D.
    EPA considered payments from commercial insurers as well but 
determined that it was not necessary to conduct a detailed analysis of 
this potential information source in light of the analyses of cleanup 
cases and enforcement data. The cleanup cases and enforcement data, in 
addition to addressing the payment experience of the Fund, court 
settlements and judgments, and voluntary claims satisfaction, also 
encompasses amounts from commercial insurance payments. For example, at 
three of the Chemicals Manufacturing NPL sites identified and reviewed, 
EPA recovered funds from a commercial insurer that had issued a policy 
to a potentially responsible party (PRP) that was a liable party at all 
three sites. Furthermore, payments from commercial insurers may have 
helped finance the work conducted by PRPs in the cleanup cases 
identified or may have been included in settlements, judgments, or 
enforcement cases identified by EPA. However, in the event there were 
significant payments from commercial insurers associated with 
facilities in the Chemical Manufacturing industry that were not already 
indirectly captured, this information would neither indicate greater 
risk to the Fund nor suggest a need for financial responsibility 
requirements under CERCLA Section 108(b).
    In considering how to structure its analysis and what data sources 
to examine, EPA reviewed prior analysis done for selection of industry 
classes in the 2010 ANPRM and public comments responding to EPA's 
approach. In the public comment period for the ANPRM, EPA received a 
total of 67 comments from 30 commenters on the Chemical Manufacturing 
industry, Petroleum and Coal Products Manufacturing industry, and the 
Electric Power Generation, Transmission, and Distribution industry. In 
addition, EPA received five comments to the Hardrock Mining Proposed 
Rule that were related to the additional classes of facilities.

[[Page 10134]]

    EPA received comments from the American Chemistry Council and the 
Society of Chemical Manufacturers and Affiliates, among others. 
Commenters indicated that EPA should concentrate on current practices 
and not legacy contamination. Commenters also said that EPA should not 
impose financial responsibility requirements on facilities that are 
already subject to other Federal laws. Lastly, many commenters believe 
that EPA placed too much emphasis on TRI data and RCRA BR data and 
expressed their opinions that these data sources are not designed or 
intended to provide risk-based information.
    In its 2017 Notice of Intent to Proceed with Rulemakings \23\ EPA 
acknowledged limitations on information that can be gained from TRI and 
BR data and announced its intention to use industry-specific and 
current sources of data to identify risk for the purposes of the 
rulemakings. EPA also analyzed those limitations in the final action 
for the Hardrock Mining rule.\24\ Accordingly, in the analysis 
conducted to assess risk in the Chemical Manufacturing industry for 
this action, EPA chose not to rely on TRI and BR data. While, at the 
time of the 2010 ANPRM, the Agency found those data sources appropriate 
for identifying classes of facilities to examine further, the Agency 
does not find the data sources valuable for assessing current risk of a 
Fund-financed response action in the industry.
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    \23\ 82 FR 3512 (Jan. 11, 2017).
    \24\ 83 FR 7570 (Feb. 21, 2018).
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VI. Chemical Manufacturing Industry Overview

A. Identification of Chemical Manufacturing Industry

    For this proposal and the associated analyses, EPA reviewed 
facilities classified under the North American Industry Classification 
System (NAICS) code 325. The most recent available census data lists 
the size of the industry at 13,480 establishments nationally.\25\ 
Chemical Manufacturing facilities transform raw materials (e.g., oil, 
natural gas, water, minerals, metals) into tens of thousands of 
different products, including pigments, synthetic fibers, bulk 
chemicals, plastics, pharmaceuticals, and consumer goods, as well as 
produce inputs to agriculture, manufacturing, and construction 
industries.
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    \25\ 2016 Economic Census of the United States, NAICS 325.
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B. Overview of Current Industry Operation

    As discussed in the approach section, to provide a backdrop for its 
analyses, EPA reviewed, and characterizes here, the operation of the 
chemical manufacturing industry from a broad perspective. Operational 
and decommissioning practices in industrial sectors and their 
associated firms can ultimately affect the ability of individual firms 
to responsibly minimize their impact on human health and the 
environment. Commodity chemical manufacturers create products in large 
quantities under continuous processing conditions, generally in large 
volumes in response to homogenous specifications. Specialty-batch 
chemical manufacturers develop products for focused markets, making 
complex products in small quantities that are then processed into 
higher value-added products. These manufacturers change their process 
lines several times a year, providing more opportunities for 
environmental improvements but also making environmental compliance 
more complicated. To consider the potential for releases as part of its 
decision making, EPA prepared a high-level review of industry practices 
and the environmental profile of the Chemical Manufacturing industry, 
which includes a summary of relevant operational and decommissioning 
materials and wastes in a background document, which is available in 
the docket for this rulemaking.\26\
---------------------------------------------------------------------------

    \26\ Chemical Manufacturing Industry Practices and Environmental 
Characterization.
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    Potentially hazardous materials are frequently used in this 
industry. These materials can include a large variety of chemicals and 
compounds. The many different processes used in the Chemical 
Manufacturing industry result in many different wastes. Typical wastes 
from Chemical Manufacturing facilities can include, for example, spent 
solvents, distillation bottoms and side-cuts, off-specification and 
unused chemicals, wastewater, wastewater treatment sludge, emission 
control sludges, filter cake, spent catalysts, byproducts, reactor 
cleanout wastes, and container residues. Chemical Manufacturing 
facilities typically handle large volumes of chemicals using above and 
below ground bulk storage tanks, transfer equipment, process piping, 
and raw material/final product storage areas. Due to the nature of this 
industry, it is not surprising that it generates high volumes of 
hazardous waste.\27\
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    \27\ According to the 2017 Hazardous Waste Report, facilities in 
this sector reported the generation of 21.7 million tons of 
hazardous waste. https://rcrapublic.epa.gov/rcrainfoweb/action/modules/br/naics.
---------------------------------------------------------------------------

    Some wastes may be found on site in surface impoundments, bulk 
storage tanks, waste piles, and disposal pits. All these areas may 
contribute to soil and groundwater contamination. Decommissioning 
wastes can include all the chemicals and substances listed above, as 
well as contaminated soil and building materials, sludges, 
neutralization liquids, and cleaning solvents. If such wastes are 
hazardous, then they must be managed in accordance with RCRA 
regulations.
    Industry practices in certain subsectors of the Chemical 
Manufacturing industry, including All Other Basic Organic Chemical 
Manufacturing (325199), Other Basic Inorganic Chemical Manufacturing 
(325180), Cyclic Crude, Intermediate, and Gum and Wood Chemical 
Manufacturing (325194), and Synthetic Dye and Pigment Manufacturing 
(325130), use more hazardous substances and generate larger volumes of 
hazardous waste. Several sectors use fewer hazardous substances and 
generate lower amounts of hazardous waste, including Custom Compounding 
of Purchased Resins (325991), Printing Ink Manufacturing (325910), 
Polish and other Sanitation Good Manufacturing (325612), Phosphatic 
Fertilizer Manufacturing (325312), and Ethyl Alcohol Manufacturing 
(325193). Further information on industry practices is provided in the 
background document for this section, which is available in the docket 
for this rulemaking.\28\
---------------------------------------------------------------------------

    \28\ Chemical Manufacturing Industry Practices and Environmental 
Characterization.
---------------------------------------------------------------------------

    Sites contaminated by the industry contain a wide variety of 
contaminants, including but not limited to toxic organics, such as 
benzene, polychlorinated biphenyls (PCBs), phenol, and volatile organic 
hydrocarbons (VOCs); chemical substances, such as benzo(b)fluoranthene, 
carbon tetrachloride, methyl methacrylate, methylene chloride, 
nitroglycerin, phosphoric acid, and sodium hypochlorite; and metals, 
such as arsenic, barium, cadmium, chromium, iron, lead, manganese, 
mercury, thorium, and zinc.
    Facilities in the Chemical Manufacturing industry are subject to a 
wide range of environmental regulation and enforcement oversight as 
discussed in Sections VII.B and VII.D below, and have adopted voluntary 
practices that can be effective at reducing pollution, as discussed in 
Section VII C.

[[Page 10135]]

C. Industry Economic Profile

    Economic trends and financial health in industrial sectors and 
their associated firms can ultimately affect the ability of individual 
firms to responsibly address their environmental liabilities. 
Circumstances in which firms face financial stress can potentially 
contribute to the abandonment of facilities and the creation of orphan 
waste sites requiring cleanup. To consider the potential for firms to 
default on their financial obligations, EPA prepared a high-level 
economic profile of the Chemical Manufacturing industry, which includes 
a summary of relevant financial metrics, industry default statistics 
and trends, and a broad discussion outlining environmental liabilities 
under Chapter 11 of the Bankruptcy Code. This analysis, summarized in 
this section, looked at the industry as a whole and additionally 
focused on four subsectors individually, providing an industry profile, 
evaluation of the potential universe of regulated entities, and 
discussion of the subsectors' financial health and relative volatility. 
The full analysis is found in the background document for this section, 
and is available in the docket for this rulemaking.\29\
---------------------------------------------------------------------------

    \29\ CERCLA 108(b) Economic Sector Profile: Chemical 
Manufacturing Industry.
---------------------------------------------------------------------------

    Generally, this analysis found the sector to be financially stable 
and able to pay off short-term obligations, though some subsectors 
experienced declining profitability and increased risk in recent years. 
Overall, financial ratios indicate healthy financial performance, 
despite an overall decrease in the total value of shipments and 
receipts for services in the sector. The report also notes that firms 
generally remain liable for environmental compliance obligations under 
Chapter 11 debt restructuring. Sections 101(5) and 1141(d) of the 
Bankruptcy Code only provide for a discharge of monetary rights to 
payment and not for compliance obligations where the Federal government 
has not sought the payment of money.

VII. Discussion of Cleanup Sites Analysis

A. Cleanup Site Evaluations

    As described in the Approach to Developing the Proposed Rule, 
Section V above, to evaluate the need for financial responsibility 
regulations in the Chemical Manufacturing industry, EPA sought examples 
of pollution that occurred under a modern regulatory framework, and 
that required a taxpayer-funded CERCLA cleanup. In its evaluation, EPA 
focused first on identifying response actions at Superfund National 
Priorities List (NPL) sites and sites using the Superfund Alternative 
Approach (SAA),\30\ as those are generally larger cleanups both in 
terms of amounts of contaminants removed and in terms of costs to carry 
out these cleanups. EPA also looked at Superfund removals at non-NPL 
sites.
---------------------------------------------------------------------------

    \30\ The Superfund Alternative Approach (SAA) uses the same 
CERCLA authority and investigation and cleanup process and standards 
that are used for NPL sites. The threshold criteria for using the 
SAA are: (1) The site must have contamination significant enough to 
make it eligible for listing on the NPL; (2) the site is anticipated 
to need remedial action; and, (3) there must be a cooperative, 
viable, capable PRP that will sign a CERCLA agreement with EPA to 
perform the necessary cleanup.
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    To identify the relevant cleanup cases in the Chemical 
Manufacturing industry, EPA included the NPL sites already identified 
in the 2010 ANPRM,\31\ and supplemented the dataset with additional NPL 
sites that had been identified since the ANPRM, sites using the SAA, 
and non-NPL sites identified in EPA's Superfund Enterprise Management 
System (SEMS) database. EPA collected information on the timing and 
nature of releases or threatened releases at these sites. Specifically, 
EPA sought to identify, as applicable, facility operation end dates, 
release dates, sources of contamination, NPL proposal dates, 
contaminated media, type of contaminant, cleanup lead, and information 
on Superfund expenditures at the site, as well as other information. 
For this collection, EPA relied on information previously collected as 
part of the ANPRM, information available in Superfund site documents 
(e.g., NPL listing narratives, Records of Decision, Action Memos, Five-
Year Reviews), and information in EPA's SEMS as of March 2018. The 
cleanup case identification and site information collection processes 
are described in greater detail in the relevant background documents, 
which are available in the docket for this rulemaking.\32\
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    \31\ 75 FR 816 (Jan. 6, 2010).
    \32\ Identification and Evaluation of National Priorities List 
(NPL) Sites and Sites using the Superfund Alternative Approach (SAA) 
Cleanup Cases in the Chemical Manufacturing Industry and 
Identification and Evaluation of CERCLA 108(b) Chemical 
Manufacturing Industry non-National Priorities List (NPL) Removal 
Sites.
---------------------------------------------------------------------------

    After compiling information about the risks and history of each 
site, EPA sought to identify instances in which releases occurred under 
the modern regulatory framework that resulted in Fund-financed response 
actions. To do so, EPA's methodology applied sequenced screens to the 
identified sites. EPA first screened out any NPL sites or sites using 
the SAA where the contaminant release or cleanup activity occurred 
before 1980. EPA chose 1980 as the cutoff point to initially screen out 
legacy contamination because it was the year when CERCLA was enacted, 
as well as the date of the initial regulations under RCRA Subtitle C 
governing the generation, treatment, storage, and disposal of hazardous 
waste. EPA chose to give these significant RCRA and CERCLA milestones 
greatest consideration due to the large number of issues of waste 
management, land disposal, and soil contamination identified in the 
review of the NPL and SAA cases. EPA believes the 1980 cutoff date is a 
conservative screen (i.e., retains more sites in the analysis) in that 
only the initial RCRA regulations were in place in 1980 and they were 
refined, expanded and enhanced several times over the next decades. 
Moreover, the Agency's enforcement authorities expanded in the 1980s as 
the RCRA program matured. Notably, the passage of the Hazardous and 
Solid Waste Amendments (HSWA) in 1984 resulted in many regulatory 
changes and enhanced enforcement mechanisms. More specifically, HSWA 
created the Land Disposal Restrictions (LDR) program, codified in 40 
CFR part 268, which prohibits the land disposal of untreated hazardous 
wastes. HSWA also substantially expanded corrective action authorities 
for both permitted RCRA treatment, storage and disposal (TSD) 
facilities and facilities operating under interim status,\33\ requiring 
facilities to address the release of hazardous wastes and demonstrate 
financial responsibility for completing the required corrective 
actions, further reducing the risks that sites would have to be 
addressed under CERCLA. For further detail on these requirements, see 
section VII. B below.
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    \33\ Interim status facilities are facilities that were in 
existence on the effective date of the regulations and subject to 
the requirement to have a RCRA permit.
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    Next, EPA sought to remove from the analysis sites where 
significant Fund expenditures had not occurred, because response 
actions that were paid for by private parties do not support the need 
for CERCLA Section 108(b) financial responsibility regulations. Using 
the ``Action Lead'' field in SEMS associated with each site, EPA 
screened out the potentially responsible party (PRP) lead sites. This 
left only the Mixed Lead Construction or Government Performed 
Construction sites in the analysis, under the assumption that PRP 
Performed

[[Page 10136]]

Construction \34\ sites did not present significant expenses to the 
Fund.
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    \34\ These terms are used in the SEMS database to identify the 
party that had primary responsibility for construction at the sites.
---------------------------------------------------------------------------

    EPA then reviewed the remaining sites (i.e., those with both 
pollution dates of 1980 or later and Mixed Lead Construction or 
Government Performed Construction designation in SEMS) individually in 
greater detail. Specifically, EPA considered the site history and each 
of the contamination sources at the site in the context of the 
regulations that would be applicable to that facility today. More 
information on the regulations EPA considered is available in Section 
VII.B.
    Findings from EPA's analysis of the cleanup cases are discussed 
below, with more detailed information available in background documents 
available in the docket for this rulemaking.\35\ These background 
documents provide the list of sites identified and remaining at each 
stage of the analysis, as well as the information considered in the 
screening and review process.
---------------------------------------------------------------------------

    \35\ Identification and Evaluation of National Priorities List 
(NPL) Sites and sites using the Superfund Alternative Approach (SAA) 
Cleanup Cases in the Chemical Manufacturing Industry and 
Identification and Evaluation of CERCLA 108(b) Chemical 
Manufacturing non-National Priorities List (NPL) Removal Sites.
---------------------------------------------------------------------------

    Using the data sources described above for the Chemical 
Manufacturing industry, EPA identified 199 NPL sites and eight sites 
using the SAA, as well as 290 non-NPL CERCLA removal action sites,\36\ 
to evaluate according to the methodology described above. As explained 
further below, the majority of the contamination at NPL sites and sites 
using the SAA were ultimately considered to involve releases that 
occurred before the modern regulatory framework or they were cases 
where no taxpayer funds were used. Similarly, for the removal sites, 
the majority of cases, albeit to a lesser extent as compared to NPLs, 
showed no releases of hazardous substances under the modern regulatory 
framework or required minimal or no taxpayer-funded cleanups, as 
described below.
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    \36\ None of these 290 removal sites are associated with an NPL 
site. Removal actions that have taken place at NPL sites or sites 
using the SAA, either before or after listing or designation, are 
tracked in SEMS as NPL or SAA level actions and not as separate 
removal records.
---------------------------------------------------------------------------

    The 199 NPL sites and eight sites using the SAA that were evaluated 
include different industry groups within the Chemical Manufacturing 
sector. While multiple manufacturing activities can occur at a site, 
facilities that were engaged in manufacturing pesticides, fertilizers, 
and agricultural chemicals show up more prevalently on the Chemical 
Manufacturing NPL list (about 42%), closely followed by facilities 
engaged in basic Chemical Manufacturing (about 39%). Other 
manufacturing activities observed to a lesser extent include resin, 
synthetic rubber, and artificial synthetic fibers and filaments 
manufacturing, paint, coating, and adhesive manufacturing, and 
``other'' types of Chemical Manufacturing activities.
    A review of the history of environmental contamination at these NPL 
and NPL-like sites revealed that the most common types of environmental 
damage were contamination of soil and ground water (approximately 90%), 
while impacts to surface water bodies were also relatively common 
(nearly 60%). To a lesser extent, impact to air and sediments were also 
observed. The primary source of the contamination was contaminated 
soils (approximately 62% of sites) that resulted from inappropriate 
waste and material handling, leaks and spills, fires and explosions, 
lack of stormwater management, and poor housekeeping practices. Other 
significant sources include disposal into unlined ponds and wastewater 
lagoons (approximately 40%) \37\ and the abandonment of hazardous waste 
and materials in drums and other containers (approximately 32%).\38\ 
Detailed discussions of the impacted media and sources of contamination 
identified at these NPL and NPL-like sites are presented in supporting 
technical background documents, which are available in the docket for 
this rulemaking.\39\
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    \37\ The regulations covering management of hazardous waste in 
surface impoundments are in 40 CFR part 264/265 Subpart K. Also see 
discussion in Section VII.B of this notice.
    \38\ The regulations covering management of hazardous waste in 
containers are in 40 CFR part 264/265 Subpart I. Also see discussion 
in Section VII.B of this notice.
    \39\ Identification and Evaluation of National Priorities List 
(NPL) Sites and Sites using the Superfund Alternative Approach 
(SAA)in the Chemical Manufacturing Industry.
---------------------------------------------------------------------------

    After characterizing the industrial activities and contamination 
history at these sites, EPA applied the screens described above to 
remove PRP-Performed Construction sites and sites where the 
environmental releases occurred pre-1980 to the 199 NPL sites and the 
eight sites using the SAA approach. Based on these criteria, EPA 
screened out 127 sites. Additionally, EPA also excluded 46 sites from 
the analysis where, upon further review, the industrial activities were 
found to fall outside of the relevant class of facilities under 
consideration in this rulemaking. Thirty-four NPL sites remained after 
those screens that were either Government Performed Construction or 
Mixed Lead Construction (i.e., a combination of Government and PRP) 
sites and had releases that arose in 1980 or later. None of the sites 
using SAA remained after those screens.
    To assess the remaining 34 sites, EPA first conducted a detailed 
review to compare the environmental issues (e.g. contamination) at the 
sites against the regulations applicable today. Based on the detailed 
review, EPA concluded that notwithstanding the screens applied at 
earlier stages of the analysis, the releases at 30 of the 34 NPL sites 
resulted largely from legacy practices and contamination. An example of 
such a case is Baird & McGuire Inc., a 20-acre facility in Holbrook, 
Massachusetts, that operated as a chemicals manufacturing and batching 
company from 1912 to 1983. EPA did not initially screen out the site 
because case files on this site showed documented discharges of black 
oily substances into a nearby wetland between 1981 and 1982. Despite 
these releases, EPA concluded that the most significant contamination 
at the site occurred largely from legacy waste disposal practices 
(included direct discharge into the soil, lagoons, and wetlands) and 
improper storage of chemicals during the 70 years of operation that 
began in 1912. Because of these practices, on-site soil, ground water, 
surface water, and municipal water supplies were contaminated, which 
prompted EPA to list the site on the NPL in 1983. When these disposal 
practices were assessed against today's modern regulatory framework, 
the releases were all found to have occurred before the promulgation of 
RCRA Subtitle C regulations. Moreover, enforcement records further 
corroborate the presence of significant compliance issues at this site 
before 1980, as the owner and operator had been fined at least 35 times 
between 1954 and 1977 by various state and Federal agencies for 
numerous violations.\40\ For discharges of oily substances into 
wetlands identified post-1980s, EPA's case file also showed Baird & 
McGuire had voluntarily taken actions, including removing the discharge 
pipes and applying absorbent pads to the wetland to soak up the oil. 
Appendix 4 of the background document provides more detailed 
discussions on this site and the 29 other NPL sites that EPA deemed as 
legacy issues after the detailed reviews.\41\
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    \40\ The NPL Site Narrative for Baird & McGuire, https://cumulis.epa.gov/supercpad/SiteProfiles/index.cfm?fuseaction=second.Cleanup&id=0100392#bkground.
    \41\ Identification and Evaluation of National Priorities List 
(NPL) Sites and Sites using the Superfund Alternative Approach (SAA) 
in the Chemical Manufacturing Industry.

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[[Page 10137]]

    Regarding the four out of the 34 NPL sites that remained after the 
screens, EPA's detailed review indicated that these sites appeared to 
have significant releases or threatened releases of hazardous 
substances under the modern regulatory framework and required 
significant taxpayer-funded cleanups. The four sites are Diaz Chemical 
Corporation in Holley, New York (which operated from 1974 through 
2002), Eldorado Chemical Company in Live Oak, Texas (which operated 
from 1978 through 2007), Mississippi Phosphates Corporation in 
Pascagoula, Mississippi (which operated from the 1950s through 2014), 
and White Chemical Corporation in Newark, New Jersey (which operated 
from 1983 through 1990).
    In all four cases, the facilities had a long history of compliance 
issues and were cited numerous times for violations under various 
statutes, including CAA, CWA, and RCRA. At three of the four sites 
(Diaz Chemical, Mississippi Phosphates, and White Chemical Corp.), 
companies filed for bankruptcy before ceasing operations and abandoning 
their sites. EPA listed three of the four sites (Diaz Chemical, 
Eldorado Chemical, and Mississippi Phosphates) on the NPL post-2000.
    In the cases of Diaz Chemical, Eldorado Chemical Company, and White 
Chemical Corp., poor housekeeping practices, spills, and improper 
handling of drums resulted in the release of a range of chemical 
substances to the air, water, soil, and ground water. In addition, when 
Diaz and White Chemical Corp. filed for bankruptcy and abandoned their 
facilities, the owner and operators left behind hundreds of hazardous 
drums and tanks containing hazardous chemicals and waste. These 
releases or threatened releases occurred at these sites despite the 
promulgation and implementation of applicable RCRA Subtitle C 
regulations in 1980 and HSWA in 1984. Evaluation of EPA's Fund 
expenditure data for these sites showed the Fund incurred over $28 
million to address site contamination at Diaz Chemical and $47 million 
at White Chemical Company. Fund expenditures at Eldorado Chemical were 
relatively small at $568,000; however, the site was just listed on the 
NPL in 2016, and Fund expenditures at the site will likely continue.
    Regarding Mississippi Phosphates, the plant ceased its operations 
in December 2014 following a bankruptcy. When the company abandoned the 
site, more than 700 million gallons of low-pH, contaminated wastewater 
was left behind in on-site ponds. Enforcement records also showed that 
during its years of operation, the facility received numerous 
Administrative Orders and Notices of Violation related to noncompliance 
with its National Pollutant Discharge Elimination System (NPDES) 
permit. The most severe violation occurred in August 2013, when the 
facility released 38 Mgal of acidic water to Bayou Casotte, killing an 
estimated 47,000 fish, and resulting in the company's entering a guilty 
plea to a criminal violation of the Clean Water Act. More information 
on this case is in the enforcement background document, which is 
available in the docket.\42\
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    \42\ Enforcement, Court Settlements and Judgments in the 
Chemical Manufacturing Industry.
---------------------------------------------------------------------------

    EPA's review of Fund expenditures showed significant Fund 
expenditures at Mississippi Phosphates. Based on the limited 
expenditure data obtained from Superfund's Integrated Financial 
Management System (IFMS) database, EPA has spent $8.3 million as of 
Fall 2018. However, in an April 2018 Action Memorandum,\43\ EPA 
indicated the total cost of the removal action at this site would be 
$132.6 million through December 2020. The memo also mentioned that EPA 
continued to treat 2 to 4 million gallons of contaminated water each 
day, which was estimated to cost $1 million a month. More detailed 
information can be found in the background document and supporting 
spreadsheets, which are available in the docket for this 
rulemaking.\44\ The background document includes the list of sites 
identified for analysis, as well as the data and information considered 
in the screening and review process. The summary results of the 
analysis are presented in Table 1 below.
---------------------------------------------------------------------------

    \43\ 2018 Action Memorandum for a Non-Time Critical Removal 
Action, Consistency Exemption Request and Ceiling Increase at 
Mississippi Phosphates Corporation National Priorities List Site, 
Pascagoula, Jackson County, Mississippi.
    \44\ Identification and Evaluation of National Priorities List 
(NPL) Sites and Sites using the Superfund Alternative Approach (SAA) 
in the Chemical Manufacturing Industry.

                                Table 1--Evaluation Results for NPL and SAA Sites in the Chemical Manufacturing Industry
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                              Detailed review identified a   Cases with release(s) under
  Total NAICS 325 NPL & SAA    Number of NAICS 325 NPL & SAA    Detailed review concluded      possible modern regulation      modern regulation that
       sites evaluated          sites screened out based on   release occurred prior to the    release but no significant     required taxpayer-funded
                                pre-1980, or PRP lead status   modern regulatory framework       taxpayer expenditures                response
--------------------------------------------------------------------------------------------------------------------------------------------------------
                  207 \45\                   127(46) \46\                             30     .............................                          4
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Additionally, EPA looked at the major removal cases found in the 
SEMS database to supplement this analysis. For this sector, EPA 
identified 290 non-NPL removal sites. Applying the methodology, EPA 
screened out 148 sites because the environmental releases occurred 
before 1980 or PRPs led the response action. EPA also excluded an 
additional 81 sites deemed as out of the scope because EPA determined 
that the industrial activities that resulted in the release of 
hazardous substances were not Chemical Manufacturing. Twenty-seven 
other sites were also left out of the analysis because of insufficient 
documentation (i.e., not enough to verify whether the sites included 
pollution attributable to a NAICS 325 facility, or the nature/date of 
the releases at the site).
---------------------------------------------------------------------------

    \45\ Includes 8 sites addressed through Superfund Alternative 
Approach (SAA).
    \46\ The number in the parentheses indicates the sites that were 
also removed at this stage of the analysis because EPA determined 
the industrial activities did not involve chemical manufacturing.
---------------------------------------------------------------------------

    To assess the 34 sites that remained after those screens, EPA first 
conducted a detailed review of case files to compare the environmental 
issues at the sites to the regulations applicable today. Based on this 
assessment, EPA concluded that the releases at four removal sites were 
one-time incidents (e.g., drum spill, chemical plant fire, accidental 
releases to air). While these releases were all found to have occurred 
after contemporary regulations, according to site documents reviewed, 
the PRPs had responded to the emergencies, and none of these sites

[[Page 10138]]

required significant Fund expenditure; at one of the four sites, EPA 
spent $19,500 in Fund money to conduct an air assessment.
    For the remaining 30 removal sites, the releases or threatened 
releases were associated mainly with the abandonment or improper 
storage of drums, tanks, and other containers that contained various 
chemicals, including hazardous substances and waste. In seven of these 
cases, chemical explosions or fires resulted from storing incompatible 
chemicals near one another. Most of these cases involved releases that 
occurred since the year 2000, which EPA determined to be releases that 
occurred under the modern regulatory framework that required taxpayer-
funded cleanup.
    As described in more detail in the Role of Federal and State 
Programs section below, the primary regulations governing the storage 
and handling of hazardous chemicals have been in place since the 1980s 
including: Occupational Safety and Health Act (OSHA) standards for 
storage and handling of flammable liquids (29 CFR 1910.106) and 
compressed gas (29 CFR 1910); Section 311 and 312 of the Emergency 
Planning and Community Right-to-Know Act (EPCRA) requirements 
concerning reporting of hazardous chemical inventory to local and state 
emergency responders; and EPCRA Section 304 requirements for emergency 
release notification for ``reportable quantity.'' In addition, drums 
and tank systems used to store hazardous waste for more than 90 days, 
or stored at locations that are not the site of generation, have been 
regulated under RCRA (requirements found in 40 CFR parts 264 and 265) 
since 1981 for drums and other containers \47\ and since 1986 for tank 
systems.\48\
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    \47\ 46 FR 2866 (Jan. 2, 1981).
    \48\ 51 FR 25472 (Jul. 14, 1986).
---------------------------------------------------------------------------

    Review of Fund expenditure data associated with these 30 sites 
indicates that the Fund incurred estimated costs ranging from $30,000 
to $3 million for response and enforcement activities. For 19 of the 30 
sites, the Fund incurred costs under $500,000 with an average cost of 
$218,000 per site. For the remaining 11 sites where the response 
actions resulted in Fund expenditures above $500,000 per site, the 
average cost was $1.4 million.
    More detailed information can be found in the background document 
and supporting spreadsheets, which are available in the docket for this 
rulemaking.\49\ The background document includes the list of sites 
identified for analysis, as well as the data and information considered 
in the screening and review process. Table 2 presents the summarized 
results of the analysis.
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    \49\ Identification and Evaluation of CERCLA 108(b) Chemical 
Manufacturing non-National Priorities List (NPL) Removal Sites.
    \50\ The number in parentheses indicates the sites that were 
also removed at this stage in the analysis: 81 Sites for which EPA 
determined the industrial activities did not involve chemical 
manufacturing, and 27 sites for which there was not enough 
documentation to be included in the analysis.

                             Table 2--Evaluation Results for Superfund Removal Sites in the Chemical Manufacturing Industry
--------------------------------------------------------------------------------------------------------------------------------------------------------
                               Number of NAICS 325 superfund                                  Detailed review identified a   Cases with release(s) under
  Total NAICS 325 superfund      removal cases screened out     Detailed review concluded      possible modern regulation      modern regulation that
   removal cases evaluated       based on pre-1980, or PRP    release occurred prior to the   release, but no significant     required taxpayer-funded
                                        lead status            modern regulatory framework       taxpayer expenditures                response
--------------------------------------------------------------------------------------------------------------------------------------------------------
                       290                  148(108) \50\     .............................                           4                            30
--------------------------------------------------------------------------------------------------------------------------------------------------------

Prevalent Sources of Releases
    EPA's analysis of cleanup cases compiled information, where 
discernable, on the root cause of releases. Across the industry 
overall, the most prevalent issue was contaminated soils that resulted 
from inappropriate waste and material handling, leaks and spills, fires 
and explosions, lack of stormwater management, and poor housekeeping 
practices. Other significant sources include disposal into unlined 
ponds and wastewater lagoons and the abandonment of hazardous waste and 
materials in drums and other containers. Beyond these, a common issue 
observed at removal sites but not as commonly at NPL sites, was 
abandonment and improper storage of drums, tanks, and other containers 
that contained various chemicals, including hazardous substances and 
waste. As discussed in the next section, there are regulations in place 
that address these types of releases.

B. Role of Federal and State Programs and Voluntary Protective Industry 
Practices at Facilities in the Chemical Manufacturing Industry

    In the 2010 ANPRM, EPA recognized that the NPL data reflects 
releases arising from activity that, in some cases, predates CERCLA, 
RCRA, and other modern environmental requirements. The Agency welcomed 
information about current releases of hazardous substances to the 
environment to help inform EPA's future actions. As discussed in the 
Approach section of this proposal, to enable EPA to base its decision 
on risk posed by facilities operating under modern conditions, i.e., 
the types of facilities to which financial responsibility requirements 
would apply, EPA developed an approach to identify and consider 
relevant state and Federal regulatory requirements and financial 
responsibility requirements that currently apply to operating 
facilities, as well as voluntary protective practices. EPA thus 
undertook an effort to gather information about Federal and state 
environmental programs and industry voluntary programs that have been 
implemented and are applicable to currently operating facilities within 
the Chemical Manufacturing industry today. EPA evaluated the extent to 
which activities that contributed to the risk associated with the 
production, transportation, treatment, storage, or disposal of 
hazardous substances are now regulated. EPA recognizes that substantial 
advances have been made in the development of manufacturing, pollution 
control, and waste management practices, as well as the implementation 
of Federal and state regulatory programs to prevent and address 
releases at these facilities. In part, EPA's proposed decision to not 
issue financial responsibility requirements for this industry is based 
on EPA's review and analysis of Federal regulations and complemented by 
state program regulations. EPA's proposed findings and conclusions 
about the impact of Federal and state environmental programs, along 
with industry voluntary programs, are discussed in the following 
section.

[[Page 10139]]

Overview of Federal and State Regulatory Programs and Industry 
Voluntary Practices Applicable to Facilities in the Chemical 
Manufacturing Industry
    EPA evaluated Federal and state regulations that address the 
potential for release of hazardous substances to the range of 
environmental media that may be affected by a release from a facility 
in the Chemical Manufacturing industry. EPA found that a comprehensive 
regulatory framework has developed since the enactment of CERCLA. 
Federal statutes such as the CAA, CWA, TSCA, RCRA, and EPCRA are 
applicable across the entire industry and lay the foundation for this 
regulatory framework. Specific regulations are discussed in the 
background document according to the affected media that the 
regulations address: Air pollution, water pollution, emergency planning 
and response, hazardous substances management, and hazardous and non-
hazardous waste management and disposal. This background document is 
available in the docket for this rulemaking.\51\
---------------------------------------------------------------------------

    \51\ Summary Report: Federal and State Environmental Regulations 
and Industry Voluntary Programs in Place to Address CERCLA Hazardous 
Substances at Chemical Manufacturing Facilities.
---------------------------------------------------------------------------

Regulations Addressing Prevalent Sources of Releases Identified in 
Analysis of Cleanup Cases
    EPA's analysis of the cleanup cases found that the most prevalent 
releases involved:
     Soil contamination from inappropriate handling of wastes 
and materials,
     Releases from leaks, spills, fires, and explosions,
     Lack of stormwater management,
     Disposal into unlined ponds and lagoons,
     Abandonment of hazardous substances and waste in drums, 
tanks or other containers,
    The comprehensive regulations for the management and disposal of 
hazardous waste, promulgated under the authority of RCRA, were designed 
to prevent these types of releases and assure that past spills are 
cleaned up by facility owners and operators. Specifically, Subtitle C 
of RCRA required EPA to establish a hazardous waste management program, 
and EPA developed a ``cradle to grave'' approach to control the 
generation, transportation, treatment, storage, and disposal of 
hazardous waste.\52\ EPA's regulatory approach under RCRA includes 
standards specific to types of hazardous wastes, types of hazardous 
waste disposal facilities, and types of hazardous waste disposal 
activities; EPA enforces these standards through permitting, reporting 
and inspection programs.\53\
---------------------------------------------------------------------------

    \52\ ``EPA History: Resource Conservation and Recovery Act,'' 
EPA, at: https://www.epa.gov/history/epa-history-resource-conservation-and-recovery-act.
    \53\ ``EPA History: Resource Conservation and Recovery Act,'' 
EPA, at: https://www.epa.gov/history/epa-history-resource-conservation-and-recovery-act; ``Summary of the Resource 
Conservation and Recovery Act,'' EPA, at: https://www.epa.gov/laws-regulations/summary-resource-conservation-and-recovery-act.
---------------------------------------------------------------------------

    In 1980, under the authority of RCRA Subtitle C, EPA promulgated 
the initial hazardous waste management and permitting regulations. 
These regulations included the identification of hazardous wastes that 
would be regulated under RCRA Subtitle C. Under Subtitle C, generators 
of hazardous waste are required to ensure and fully document that the 
hazardous waste they produce is properly identified, managed, tracked, 
and treated prior to recycling or disposal. The degree of regulation to 
which each generator is subject depends to a large extent on how much 
waste each generator produces every calendar month. Early in the 
development of the RCRA program, EPA recognized that a relatively small 
number of industrial facilities generated the majority of the nation's 
hazardous waste. EPA initially focused on these large quantity 
generators, i.e., those that generate 1,000 kilograms or more of non-
acute hazardous waste per month (or more than 1 kilogram of acute 
hazardous waste per month). These facilities must obtain an EPA 
identification number and report the quantities and types of hazardous 
waste they generate, as well as the intended receiving facility for 
treatment and disposal, unless the waste will be managed onsite. Large 
quantity generators who send their waste offsite are responsible for 
the proper packaging and labeling of the waste before transport and the 
tracking of the waste to the destination facility using the uniform 
hazardous waste manifest. Large quantity generators may store their 
waste on site for less than 90 days before transport to a treatment and 
disposal facility; that storage is subject to the same unit-specific 
standards (described below) applicable to treatment, storage, and 
disposal facilities.
    RCRA Subtitle C also established standards for hazardous waste 
treatment, storage, and disposal facilities (TSDFs). Operators that 
handle or manifest hazardous waste at any point in its lifecycle, 
including generators and transporters, are required to notify EPA of 
these activities. To keep track, TSDF owners and operators must keep 
records and make reports to EPA. TSDFs are required to track hazardous 
waste they receive through EPA's hazardous waste manifest system, among 
other recordkeeping and reporting standards.
    RCRA Subtitle C regulations created a permitting program for 
hazardous waste TSDFs. The TSDF permitting regulations include 
application procedures, permit approval conditions, and monitoring and 
reporting requirements. TSDFs must have permits for the entirety of the 
active life of the permitted units, including during closure of waste 
management units. New and existing hazardous waste TSDFs must submit a 
RCRA permit application at least 180 days before the commencement of 
construction and/or hazardous waste management activities.\54\ Both 
permitted and interim status TSDFs must comply with general facility 
operating standards, preparedness and prevention, contingency plans and 
emergency procedures, as well as specific technical standards designed 
to insure that hazardous waste management units such as storage tanks 
and containers, landfill, surface impoundments, waste piles, land 
treatment of hazardous waste, and solid waste management units are 
operated in a manner that prevents releases. To minimize the potential 
for leachate to threaten human health and the environment, EPA 
developed design and operating standards that use a combination of 
different technologies and good operating practices to detect, contain, 
and clean up any leaks that might occur. To prevent releases of 
hazardous waste into the environment, containers holding liquid 
hazardous wastes at a permitted TSDF must have a secondary containment 
system. Secondary containment is emergency short-term storage designed 
to hold leaks from hazardous waste management units.
---------------------------------------------------------------------------

    \54\ 45 FR 33063 (May 19, 1980).
---------------------------------------------------------------------------

    Slightly later in the 1980s, EPA promulgated regulations that set 
financial assurance requirements for TSDFs.\55\ The TSDF standards 
eventually included air emission standards for process vents, equipment 
leaks, tank systems, surface impoundments, and containers. The 
regulations covering proper management of surface impoundments, found 
in 40 CFR parts 264/265, Subpart K, require facilities that store 
hazardous

[[Page 10140]]

waste in surface impoundments to meet specific design requirements, 
which include a double liner system, leachate collection, and removal 
systems and a leak detection system. The regulations for containers, 
found in 40 CFR parts 264/265, Subpart I, include provisions regarding 
design and operating requirements, and inspections. Certain 40 CFR part 
265 standards also apply to hazardous waste containers at generator 
sites.
---------------------------------------------------------------------------

    \55\ 45 FR 33063 (May 19, 1980); 47 FR 15047 (Apr. 7, 1982).
---------------------------------------------------------------------------

    HSWA was enacted in 1984, largely in response to citizen concerns 
that existing methods of hazardous waste disposal, particularly land 
disposal, were not safe. With HSWA, Congress sought to minimize waste 
generation and phase out land disposal of hazardous waste. Accordingly, 
in 1986, EPA promulgated a suite of regulations that established 
standards and restrictions for land disposal of hazardous waste. While 
the regulations set stringent guidelines for the land disposal of 
hazardous waste, some hazardous wastes and some types of land disposal 
are prohibited altogether. Although there are exceptions, operators are 
generally prohibited from diluting hazardous waste as a substitute for 
treatment. In addition, operators can land dispose hazardous waste only 
following treatment and only in appropriate land treatment units, 
landfills and surface impoundments, Further, operators must meet 
testing, removal, recordkeeping, and design requirements. Additional 
standards, restrictions, and prohibitions are in place for hazardous 
waste that exhibit ignitability, corrosivity, reactivity, or 
toxicity.\56\
---------------------------------------------------------------------------

    \56\ 51 FR 40572 (Nov. 7, 1986).
---------------------------------------------------------------------------

    HSWA required that all landfills and surface impoundments install 
groundwater monitoring, comply with technical requirements, such as 
double liners and leachate collection, and obtain financial assurance. 
The HSWA amendments also added to RCRA's regulations for small quantity 
generators, facilities that generated between 100 to 1,000 kilograms 
per month of hazardous waste, which were previously exempt from RCRA 
rules. These small quantity generator rules took effect in 1986. 
Generators of less than 100 kilograms per month of hazardous waste 
(i.e., conditionally-exempt small quantity generators) remained subject 
to significantly reduced requirements.\57\ EPA amended the hazardous 
waste generator provisions in 2016, largely to clarify the 
requirements.\58\
---------------------------------------------------------------------------

    \57\ Id.
    \58\ 81 FR 85732 (Nov. 28, 2016).
---------------------------------------------------------------------------

    HSWA also established closure and post-closure requirements for 
hazardous waste TSDF facilities. The regulations require facilities to 
develop closure plans for all hazardous waste management units. All 
TSDFs are required to prepare and submit written closure plans. A 
permitted facility submits this plan as part of its permit application. 
Once the plan is approved by the permitting agency, it becomes part of 
the facility's operating permit. Interim status facilities \59\ must 
have written closure plans within six months of becoming subject to the 
closure regulations. Upon the completion of closure of a hazardous 
waste disposal unit, owners and operators must submit a certification 
of closure to the relevant state or EPA regional office. Following 
closure, facilities must implement a post-closure plan that abides by 
post-closure property use and care guidelines. The standard post-
closure care period is 30 years, but this can be shortened or extended 
on a case-by-case basis by the permitting authority (i.e., the EPA 
Region or the authorized state regulatory agency). Post-closure 
notification and security requirements remain in place so long as 
hazardous waste is present at the facility, even after the 30-year 
post-closure period.\60\
---------------------------------------------------------------------------

    \59\ Interim status facilities are facilities that were already 
in existence at the time of the enactment of the permitting 
regulations. Interim status facilities must comply with the 
requirements in 40 CFR part 265 until they receive their permit.
    \60\ 51 FR 16444 (May 2, 1986).
---------------------------------------------------------------------------

    HSWA provided EPA with authority to develop a broader corrective 
action program. Under this program, EPA requires owners and operators 
of facilities that treat, store or dispose of hazardous waste to 
investigate and clean up hazardous releases into soil, groundwater, 
surface water and air, thus reducing the likelihood that these 
facilities would require cleanup under Superfund. RCRA permits issued 
to TSDFs must include provisions for both corrective action and 
financial assurance to cover the costs of implementing those cleanup 
measures. EPA also possesses additional authorities to order corrective 
action through enforcement orders, which are not contingent upon a 
facility's permit. In addition, facilities may voluntarily choose to 
clean up their contamination.
    In addition to Subtitle C requirements, RCRA Subtitle D established 
a program for management and disposal of non-hazardous industrial and 
municipal solid waste through state solid waste management plans that 
conform with Federal guidelines. RCRA Subtitle I requires EPA to 
promulgate technical standards and corrective action requirements for 
owners and operators of underground storage tanks (USTs), including 
underground storage tanks that contain hazardous substances or 
petroleum products. The UST regulations include requirements for 
design, installation, notification, operational procedures, release 
reporting, release response, and corrective action procedures for 
underground storage tank systems that contain hazardous substances. The 
regulations also include financial responsibility requirements for 
underground storage tank owners and operators. In addition, EPA has 
established guidelines for the approval of state underground storage 
tank programs.\61\
---------------------------------------------------------------------------

    \61\ 53 FR 37082 and 43322 (Nov. 27, 2018).
---------------------------------------------------------------------------

    In addition to the regulatory scheme that RCRA imposes on the 
management of hazardous waste in underground storage tanks that store 
chemicals, Chemical Manufacturing plants are subject to a number of 
additional regulatory provisions that reduce the potential for the 
plants to pose a risk for a Federally-financed response action. 
Catastrophic releases of hazardous substances and the use of toxic 
chemicals and other hazardous substances are additional environmental 
and safety concerns for Chemical Manufacturing facilities. Several 
environmental laws authorize regulations requiring the development of 
response plans for various emergencies in order to reduce the effects 
of a release, and to notify local emergency response personnel and 
facilitate cooperation. For example, EPA implements the Chemical 
Accident Prevention Provisions of Section 112(r) of the Clean Air Act 
Amendments, which require certain facilities to generate Risk 
Management Plans (RMPs) to mitigate the effects of a chemical accident 
and to coordinate with local response personnel. Emergency Action Plan 
(EAP) regulations under OSHA require that employers prepare a written 
EAP to create practices to follow during workplace emergencies. EPA 
implements regulations under the EPCRA that impose emergency planning, 
reporting, and notification requirements for hazardous and toxic 
chemicals.
    The U.S. Chemical Safety Board (CSB), authorized by the CAA 
Amendments of 1990, is involved in investigating accidental releases at 
Chemical Manufacturing facilities. Specifically, the principal role of 
the CSB is to investigate accidents to determine the conditions and 
circumstances which led up to the event

[[Page 10141]]

and to identify the cause or causes so that similar events might be 
prevented. Implementation of recommendations resulting from 
investigations can prevent future releases of hazardous substances to 
the environment. The CSB's investigative function is completely 
independent of the rulemaking, inspection, and enforcement authorities 
of both EPA and OSHA.\62\
---------------------------------------------------------------------------

    \62\ www.csb.org.
---------------------------------------------------------------------------

    Hazardous substances management regulations address the storage and 
transportation of hazardous substances. These regulations are 
implemented by EPA, OSHA, and the Pipeline and Hazardous Materials 
Safety Administration (PHMSA). The regulations address the registration 
and reporting of hazardous substances that are manufactured or produced 
through industrial processes; hazardous substance release prevention; 
mitigation of harm caused by hazardous substance releases; safety and 
catastrophe prevention for facilities that handle hazardous substances; 
and standards for the transportation of hazardous substances. EPA 
implements hazardous substances management regulations largely under 
the authority of the TSCA and the Pollution Prevention Act (PPA), while 
the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) applies 
to the manufacture and distribution of pesticides.
    TSCA provides EPA with authority to issue rules requiring 
reporting, record-keeping, and testing of specific chemicals and to 
establish regulations that restrict the manufacturing (including 
import), processing, distribution in commerce, use, and disposal of 
chemicals and mixtures. TSCA authorizes EPA to prevent unreasonable 
risks by regulating chemicals and mixtures, ranging from requiring 
hazard warning labels to the outright ban on the manufacture, 
processing, distribution in commerce or use of certain chemicals and 
mixtures. TSCA and its amendments have also established specific 
programs for the management of certain chemicals--namely, PCBs, 
asbestos, radon, lead, mercury, and formaldehyde.
    The PPA, passed in 1990, created a national policy framework to 
focus industry, government, and public attention on pollution and to 
prevent or reduce pollution at the source through technology 
modifications, modifications of production processes, product redesign, 
and improvements in maintenance, training, and inventory control. PPA 
regulations require, among other things, that facility owners and 
operators include toxic chemical source reduction and recycling reports 
with their annual toxic chemical release filing.
    Pesticides are outside the scope of TSCA's regulatory authority; 
EPA explicitly regulates pesticides under the authority of FIFRA. The 
modern pesticide regulatory framework came into being with the 1972 
Federal Environmental Pesticide Control Act, which further amended 
FIFRA. The amendments created registration procedures for pesticides, 
including data requirements, Agency review protocols, and 
classification procedures. In order to obtain registration, 
manufacturers and distributors must submit the pesticide's ingredients, 
its target crop, use practices, and storage and disposal practices. The 
review includes a determination regarding the pesticide's potential to 
cause unreasonable adverse effects on the environment. Classification 
procedures involve the categorization of pesticide components as active 
or inert. Manufacturers must renew their registration for each 
pesticide every 15 years. Following registration, EPA has the authority 
to initiate special review procedures if information comes to light 
indicating that the use of a pesticide may cause unreasonable adverse 
effects on the environment. Regulations under FIFRA also cover the 
management and disposal of pesticides through standards and 
requirements for containers, repackaging procedure, and the use of 
containment structures.\63\ The amendments granted EPA authority to 
stop the distribution of, and to remove from use, any pesticide the 
Agency finds to be in violation of FIFRA.
---------------------------------------------------------------------------

    \63\ 53 FR 15975; 50 FR 49001; 40 FR 28268; 71 FR 47422; 
``Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) and 
Federal Facilities,'' EPA, accessed October 17, 2018 at: https://www.epa.gov/enforcement/federal-insecticide-fungicide-and-rodenticide-act-fifra-and-federal-facilities; ``About Pesticide 
Registration,'' EPA, accessed November 26, 2018 at: https://www.epa.gov/pesticide-registration/about-pesticide-registration.
---------------------------------------------------------------------------

    In addition to registration and reporting requirements for 
pesticide products, FIFRA regulations also establish registration and 
reporting requirements for pesticide manufacturing facilities. Any 
establishment that produces pesticide products or substances used as 
active ingredients in pesticides must provide facility and company 
information to EPA upon registration. Relevant facilities must also 
submit annual reports to EPA that detail the amount of pesticide 
product produced and distributed each year, as well as production 
estimates for the following year. In connection with the compilation of 
annual reports, facilities must keep production, distribution and sale, 
shipment, inventory, and testing records.\64\
---------------------------------------------------------------------------

    \64\ 53 FR 35058; 45 FR 54338; ``Federal Insecticide, Fungicide, 
and Rodenticide Act (FIFRA) and Federal Facilities,'' EPA, accessed 
October 17, 2018 at: https://www.epa.gov/enforcement/federal-insecticide-fungicide-and-rodenticide-act-fifra-and-federal-facilities.
---------------------------------------------------------------------------

    With respect to workplace management of hazardous substances, OSHA 
promulgated Process Safety Management (PSM) standards in 1992. The PSM 
standards address the potential for unexpected releases of toxic, 
reactive, or flammable liquids and gases in processes involving highly 
hazardous chemicals. Under PSM, processes include the use, storage, 
manufacture, handling, or transportation of hazardous chemicals. The 
standards identify approximately 130 toxic and reactive chemicals; they 
apply to facilities that manage quantities of those chemicals above a 
specific chemical's established threshold. PSM standards also apply to 
facilities that manage flammable liquids and gases in quantities of 
10,000 pounds or greater. Facilities must compile information on the 
hazards of highly hazardous chemicals, including toxicity, reactivity 
data, corrosivity data, stability data, and permissible exposure 
limits. Facilities must also collect information on the technology used 
by each relevant industrial process. With this information, facilities 
must complete a process hazardous analysis (PHA) for each relevant 
process. The PHA for a facility is a review of possible releases of 
hazardous chemicals that may result from the process and safeguards 
that the facility will implement to prevent releases.\65\
---------------------------------------------------------------------------

    \65\ ``Process Safety Management,'' OSHA, accessed September 19, 
2018 at: https://www.osha.gov/Publications/osha3132.html; 57 FR 
6403.
---------------------------------------------------------------------------

    In 2011, OSHA initiated the Chemical Plant National Emphasis 
Program (NEP) under its PSM regulations. Through the NEP, OSHA conducts 
inspections of randomly selected facilities that handle, manage, or 
store highly hazardous chemicals in quantities that meet the PSM 
threshold. The inspections include fact gathering related to PSM 
requirements and verification that employers have met PSM 
standards.\66\
---------------------------------------------------------------------------

    \66\ ``OSHA Issues New National Emphasis Program for Chemical 
Facilities,'' OSHA, November 30, 2011, accessed November 29, 2018 
at: https://www.osha.gov/news/newsreleases/trade/11302011-0.
---------------------------------------------------------------------------

    Contamination of surface water is largely addressed by the CWA. 
Under CWA, EPA has implemented pollution control measures, including 
Federal

[[Page 10142]]

water quality standards and industry wastewater and Effluent Limitation 
Guidelines (ELGs). These regulations set standards for industrial 
wastewater discharge to surface water on an industry-specific basis, 
identifying key processes and materials to regulate within each 
industry. The standards require industrial discharges to meet 
technological specifications in their treatment and discharge systems, 
rather than pollutant specific quality standards for discharges. ELGs 
may set one, all, or a combination of the following types of 
technological standards, which facilities within each industry must 
meet: Best practicable control technology currently available, best 
conventional pollutant control technology, best available technology 
economically achievable, new source performance standards, pretreatment 
standards for new sources, pretreatment standards for existing sources, 
and best management practices.\67\
---------------------------------------------------------------------------

    \67\ ``Industrial Effluent Guidelines,'' EPA at: https://www.epa.gov/eg/industrial-effluent-guidelines; ``Learn About 
Effluent Guidelines,'' EPA at: https://www.epa.gov/eg/learn-about-effluent-guidelines; 39 FR 4532 (Feb. 1, 1974).
---------------------------------------------------------------------------

    EPA published industry-specific effluent guidelines for pesticides 
in 1978, for inorganic chemicals manufacturing in 1982, and for organic 
chemicals, plastics, and synthetic fibers in 1987.\68\ The pesticide 
guidelines include even more specific standards for organic pesticide 
chemicals manufacturing and metallo-organic pesticide chemicals 
manufacturing.\69\ With respect to organic chemicals manufacturing, EPA 
promulgated specific standards for facilities that manufacture benzene, 
polypropylene, polyvinyl chloride, rubber precursors, chlorinated 
solvents, toluene, rayon, nylon, and polyester.\70\
---------------------------------------------------------------------------

    \68\ 43 FR 17776 (Apr. 25, 1978); 47 FR 28278 (Jun. 29, 1982); 
52 FR 42522 (Nov. 5, 1987).
    \69\ 43 FR 17776 (Apr. 25, 1978).
    \70\ 52 FR 42522 (Nov. 5, 1987).
---------------------------------------------------------------------------

    Additionally, the CWA established the NPDES permit program, which 
controls point source discharges to surface water, and the National Oil 
and Hazardous Substances Pollution Contingency Plan (NCP), which sets a 
blueprint for responding to oil spills and hazardous substance 
releases. At its inception in 1968, the NCP provided a comprehensive 
Federal system of accident reporting, spill containment, and cleanup of 
oil spills. In 1972, the CWA expanded it to include hazardous substance 
releases.\71\
---------------------------------------------------------------------------

    \71\ ``National Oil and Hazardous Substances Pollution 
Contingency Plan (NCP) Overview,'' EPA at: https://www.epa.gov/emergency-response/national-oil-and-hazardous-substances-pollution-contingency-plan-ncp-overview.
---------------------------------------------------------------------------

State Regulatory Programs
    Some states impose requirements on the Chemical Manufacturing 
industry in addition to requirements related to Federal programs. These 
stricter or additional standards for emissions, spill prevention, 
emergency preparedness, and hazardous substance management on 
facilities that handle toxic or hazardous chemicals can reduce risk at 
facilities that manage hazardous substances. EPA researched state 
environmental regulations relevant to the Chemical Manufacturing 
industry for a representative sample of states. The states with the 
highest number of Chemical Manufacturing facilities include California, 
Texas, Illinois, Ohio, Florida, New Jersey, Pennsylvania, New York, and 
Georgia. A discussion of these state regulations, as well as the 
methodology EPA used in selecting the 11 states that it researched in a 
background document, is available in the docket for this 
rulemaking.\72\
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    \72\ Summary Report: Federal and State Environmental Regulations 
and Industry Voluntary Programs in Place to Address CERCLA Hazardous 
Substances at Chemical Manufacturing Facilities.
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    One example of a state with standards for Chemical Manufacturing 
facilities that are stricter than Federal requirements is Illinois, 
which has separate standards for sewage discharges from Chemical 
Manufacturing facilities, and additional standards for solid waste 
landfills with chemical constituents. Another example is California, 
which requires a land covenant upon facility closure, corrective 
action, remedial or response action, or any other response action when 
hazardous materials, hazardous wastes or constituents, or hazardous 
substances remain at a property in levels exceeding suitable use 
standards.\73\ California also requires financial responsibility for 
owners and operators of underground storage tanks, which includes an 
Underground Storage Tank Cleanup Fund that funds eligible corrective 
actions.\74\ For producers of extremely hazardous waste, California 
also operates an Extremely Hazardous Waste Permit system.\75\
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    \73\ 22 California Code of Regulation (CCR) 67391.
    \74\ 23 CCR 2803.
    \75\ 22 CCR 67430.
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Industry Voluntary Practices
    EPA reviewed facility RMPs, industry materials, governmental 
literature, and academic literature to locate voluntary programs that: 
(1) Attempt to address CERCLA hazardous substance management or 
disposal, and release prevention, mitigation, and response; (2) are 
relevant to Chemical Manufacturing facilities; and (3) in which 
Chemical Manufacturing facilities participate. Industry voluntary 
programs fall into three categories: Those sponsored by Federal, state 
or local governmental agencies; those fostered within industry 
associations or non-governmental organizations; and those implemented 
by individual firms. These programs set or publish environmental 
management and safety standards that facilities may follow to 
supplement Federal and state requirements with additional standards and 
may come with a certification from the government agency or industry 
group that establishes the standards. Voluntary programs may also serve 
as forums for coordination and collaboration among companies, 
facilities, and government agencies to develop best practice standards 
and improve emergency preparedness. EPA's review of available studies 
found that the industry voluntary programs can be effective at reducing 
both pollution and the frequency of government enforcement actions.
    At the federal level, OSHA and FEMA sponsor or collect information 
about industry voluntary programs. National and international nonprofit 
organizations and industry associations, such as the International 
Organization for Standardization (ISO), International Electrotechnical 
Commission (IEC) and Global Environmental Management Initiative (GEMI), 
also provide environmental management and safety standards and 
procedures that facilities may follow, in addition to regulatory 
requirements, and certify facilities that meet these specifications.
    The American Chemistry Council, an industry trade association for 
chemical companies, adopted the Responsible Care program, which is a 
global initiative to further the chemical manufacturing industry's 
environmental, health, safety, and security performance efforts, with a 
focus on safe chemicals management throughout chemical lifecycles. To 
obtain membership in the American Chemistry Council, a company must 
participate in the Responsible Care program. Responsible Care requires 
that companies commit to and are compliant with the program's guiding 
principles and requirements. Participants are subject to reporting 
requirements and mandatory facility audits under the program.\76\ A 
discussion of industry voluntary practices, as well as the

[[Page 10143]]

methodology used by EPA, is available in the docket for this 
rulemaking.\77\
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    \76\ ``Responsible Care,'' American Chemistry Council, accessed 
October 16, 2018 at: https://responsiblecare.americanchemistry.com/.
    \77\ Summary Report: Federal and State Environmental Regulations 
and Industry Voluntary Programs in Place to Address CERCLA Hazardous 
Substances at Chemical Manufacturing Facilities.
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C. Existing State and Federal Financial Responsibility Programs

    To help inform the level of risk of a Fund-financed response action 
associated with classes of facilities in the Chemical Manufacturing 
industry, EPA reviewed existing state and Federal financial 
responsibility programs that may be applicable to the industry and that 
cover a wide range of liabilities, including liabilities for closure, 
post-closure care, corrective action, third-party personal injury/
property damage, and natural resource damages. EPA focused on these 
types of financial responsibility programs for two reasons. First, 
these categories of damages, actions and costs are like those that 
could be covered by CERCLA Section 108(b) rulemaking, and thus they 
help inform the need for CERCLA Section 108(b) financial responsibility 
for this industry. Secondly, the existence of financial responsibility 
requirements can help create incentives for sound practices, reducing 
the risk of releases requiring CERCLA response action. EPA also sought 
to identify state cleanup funds that are at least partially funded by 
industry (e.g., through a tax on hazardous wastes generated), and that 
could cover future CERCLA liabilities that may arise at Chemical 
Manufacturing facilities. EPA's report focused on the 25 states 
reviewed in EPA's reports on existing state regulatory and voluntary 
programs (excluding financial responsibility programs) that may be 
applicable to Chemical Manufacturing facilities.
    Finally, EPA reviewed existing financial responsibility 
requirements in the following Federal programs: (1) RCRA Subtitle C 
TSDFs; (2) TSCA commercial PCB waste facilities; and (3) EPA Safe 
Drinking Water Act Underground Injection Control wells. The RCRA 
Subtitle C regulations require all TSDFs to demonstrate that they will 
have the financial resources to properly close the facility or unit 
when its operational life is over, perform post-closure care (if 
necessary) and provide the appropriate corrective action in the case of 
a release. Additionally, the RCRA liability coverage regulations 
require all owners and operators of hazardous waste TSDFs to maintain 
accident liability insurance during the active life of their hazardous 
waste management units or facilities. These requirements would apply to 
facilities in the Chemical Manufacturing industry that treat store or 
dispose of a hazardous waste.
    The TSCA regulations for PCB commercial storage facilities require 
all commercial storage facilities to demonstrate financial assurance 
for closure of the facility. Under the Safe Drinking Water Act 
regulations designed to protect underground sources of drinking water, 
owners or operators of underground injection control operations are 
required to maintain financial responsibility for plugging and 
abandonment of wells. These requirements apply to owners and operators 
of permit-authorized class I, II, III and geologic sequestration class 
VI wells. The report is available in the docket for this 
rulemaking.\78\
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    \78\ Review of Existing Financial Responsibility Laws 
Potentially Applicable to Classes of Facilities in the Chemical 
Manufacturing Industry.
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    EPA identified a range of existing financial responsibility 
programs that may be applicable to facilities in the Chemicals 
Manufacturing industry. The programs include the Federal programs 
mentioned above as well as state programs related to:
     Financial Responsibility for petrochemical manufacturing 
facilities,
     Financial Responsibility for phosphate fertilizer 
manufacturing facilities,
     Financial Responsibility for hazardous waste TSDFs,
     Financial Responsibility for underground injection of 
hazardous wastes,
     Financial Responsibility for PCB storage or disposal 
facilities,
     Corrective action financial responsibility to address 
hazardous waste or hazardous constituents,
     Facility remediation financial responsibility associated 
with transfer in ownership or facility closure,
     Financial Responsibility for storage tanks containing 
hazardous substances, and
     Other authorities to require financial responsibility to 
assure compliance with orders.
    The applicability of these programs will depend on a variety of 
facility-specific factors, for example, use of a specific piece of 
equipment (e.g., an underground storage tank that contains regulated 
substances) or engaging in a specified activity (e.g., a release of a 
hazardous substance). Furthermore, state financial responsibility 
programs vary by state and some types of financial responsibility 
programs exist only in limited subsets of the states reviewed. EPA 
believes that state and Federal financial responsibility programs help 
reduce risk of a Fund-financed response action at facilities where they 
are applicable. While financial responsibility programs vary in 
structure and function, they may reduce such risk in a myriad of ways. 
For example, they may help ensure undercapitalized firms do not engage 
in environmentally risky enterprises, reduce the incentive to abandon 
properties with extensive contamination, ensure compliance with 
protective requirements, and incentivize better environmental 
practices.

D. Compliance and Enforcement History

    To understand the experience of court settlements and judgments, 
EPA looked at compliance and enforcement in the Chemical Manufacturing 
industry. EPA believes that compliance assistance, compliance 
monitoring, and enforcement are important components of the regulatory 
framework discussed above. Through inspections, compliance monitoring 
can identify noncompliance at regulated facilities. Enforcement actions 
may result in legal instruments that ensure correction of deficiencies 
to achieve compliance with environmental requirements. Some functions 
of compliance and enforcement actions are particularly pertinent to the 
risk determination for rulemaking under CERCLA Section 108(b). First, 
if noncompliance causes release of a hazardous substance, then EPA can 
ensure through negotiated agreements that the responsible party carries 
out or pays for the cleanup. Second, enforcement actions can result in 
orders and settlements that compel a responsible party to return to 
compliance. Third, the prospect of financial penalties that can 
accompany these enforcement instruments can encourage compliance. All 
of these functions support the regulatory structure in reducing risk of 
Fund expenditures.
    EPA looked at enforcement activities as well as historical 
enforcement and compliance data in the development of this proposal. 
EPA obtained data from the EPA Enforcement and Compliance History 
Online (ECHO) system and provides a review of the Federal environmental 
enforcement settlements and judgments data from FY 1972 through FY 
2017.\79\ Facilities whose primary NAICS codes indicate Chemical 
Manufacturing sector activities (NAICS 325) were included in EPA's 
review.

[[Page 10144]]

ECHO data show that initiatives and normal review or inspection of 
facilities resulted in over 7700 civil enforcement cases in the 
Chemical Manufacturing industry from FY 1972 through FY 2017. CAA (32%) 
and FIFRA (17%) cases were the most common. There are a smaller number 
of cases in RCRA (12%), CERCLA (12%), CWA (11%), EPCRA (11%), and TSCA 
(6%). Further description of this review is in the background document, 
which is available in the docket for this rulemaking.\80\
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    \79\ ECHO does not include all of EPA's compliance and 
enforcement activity because regions are not required to report 
``informal actions,'' and it does not consistently capture all state 
actions.
    \80\ Enforcement, Court Settlements and Judgments in the 
Chemical Manufacturing Industry.
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    As noted above, the Risk Management Program under Chemical Accident 
Prevention Provisions of Section 112(r) of the Clean Air Act Amendments 
requires certain facilities to generate Risk Management Plans (RMPs) to 
mitigate the effects of a chemical accident and coordinate with local 
response personnel. Assuring compliance with this program has been a 
priority of EPA's Office of Enforcement and Compliance Assurance since 
2017.
    Enforcement cases can include instances in which removal action, 
release reduction, or return to compliance include the removal of 
contaminated media by the responsible party. Measures to remove 
contamination may be required in enforcement orders under the range of 
environmental statutes and are negotiated to require activities aligned 
with return to compliance.\81\ In this situation, enforcement action 
directly reduces risks to human health and the environment. During the 
period FY 2012 through FY 2017, 32 settled Chemical Manufacturing 
industry enforcement cases have been indicated as those where removal 
of contaminated media occurred. They are primarily CERCLA (50%) and 
RCRA (34%) cases. Two CWA, two TSCA and one Safe Drinking Water cases 
are also included.
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    \81\ These ECHO enforcement removals are separate from the 
Superfund removals analyzed elsewhere. ECHO system data includes the 
combined value of total enforcement financial penalties, 
Supplemental Environmental Projects (SEPs), and associated 
compliance activity.
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    The substances removed are generally categorized as hydrocarbons, 
hazardous chemicals, and metals. These cleanups resulting from Federal 
enforcement actions mitigated risks to human health and the environment 
by removing soils, groundwater, and sediments contaminated by a variety 
of substances, and reduced likelihood of impact to the Fund.
    Settlements and judgments in enforcement cases can result in 
financial penalties, supplemental environmental projects (SEPs), and 
activities required to return to compliance.\82\ Enforcement 
settlements and judgments can ensure that the responsible party 
conducts or pays for cleanup, can drive a return to compliance, and 
more generally can incentivize compliance.
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    \82\ Compliance actions ordered can include the removal of 
contaminated media, installation of new equipment, or implementation 
of compliant processes.
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    As stated in the cleanup site evaluations in Section VII.A, 
particular consideration was given to CERCLA and RCRA regulations as 
relevant components of the modern regulatory framework that applies to 
the Chemical Manufacturing industry. There have been over 1800 CERCLA 
and RCRA civil cases in this industry, beginning in 1981. For context, 
there are approximately 13,480 establishments currently operating in 
the industry. The ten largest CERCLA or RCRA enforcement settlements 
and judgments for the Chemical Manufacturing industry each have 2017 
inflation-adjusted total values ranging from over $51 million to $1.1 
billion.
    Further discussion of the details on the Federal actions for these 
and additional criminal cases can be found in the background document, 
which is available in the docket for this rulemaking.\83\ This document 
identifies facilities where noncompliance was identified and was 
addressed by means of formal Federal enforcement. The background 
document does not include either facilities where noncompliance was 
addressed through informal enforcement or facilities where 
noncompliance was addressed by a state. In addition, it does not 
include facilities where noncompliance was not identified, either 
because those facilities were not inspected or because they were 
inspected and found in compliance.
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    \83\ Enforcement, Court Settlements and Judgments in the 
Chemical Manufacturing Industry.
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    The compliance and enforcement actions documented here and in the 
background document show that where noncompliance is identified, many 
industry responsible parties are conducting or paying for cleanups, 
returning to compliance, and improving public health and the 
environment. In this industry, the largest CERCLA and RCRA civil and 
judicial Federal cases are recently concluded and represent significant 
operational compliance requirements and/or financial penalties. Several 
major enforcement cases highlighted in the EPA chemical sector 
notebooks \84\ evolved into decades of litigation, multiple Federal 
enforcement cases, risks to human health and the environment, and NPL 
sites. Enforcement actions alone do not completely supplant the need 
for Fund-financed response actions either at these highlighted sites or 
generally in the Chemical Manufacturing industry (as discussed in 
section VIII below). Active enforcement serves as an important 
component of the regulatory framework.
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    \84\ Profile of the Agricultural Chemical, Pesticide, and 
Fertilizer Industry, Sep 2000, EPA 310-R-00-003; Profile of the 
Organic Chemical Industry, 2nd Edition, Nov 2002, EPA 310-R-02-001; 
Profile of the Plastic Resin and Manmade Fiber Industries, Sep 1997, 
EPA 310-R-97-006; and Profile of the Pharmaceutical Manufacturing 
Industry, Sep 1997, EPA 310-R-97-005.
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VIII. Decision To Not Propose Requirements

    Based on consideration of the analyses described in the previous 
sections, as summarized below, EPA has reached a conclusion that the 
degree and duration of risk posed by the Chemical Manufacturing 
industry does not warrant financial responsibility requirements under 
CERCLA Section 108(b) and thus is proposing to not issue such 
requirements. The analysis and proposed finding in this proposal are 
not applicable to and do not affect, limit, or restrict EPA's authority 
(1) to take a response action or enforcement action under CERCLA at any 
facility in the Chemical Manufacturing industry, including any 
currently operating facilities or those described in this proposal and 
in the background documents for this proposal, and (2) to include 
requirements for financial responsibility as part of such response 
action. The set of facts in the rulemaking record related to the 
individual facilities discussed in this proposed rulemaking supports 
the Agency's proposal not to issue financial responsibility 
requirements under Section 108(b) for this class, but a different set 
of facts could demonstrate a need for a CERCLA response action at an 
individual site. This proposed rulemaking also does not affect the 
Agency's authority under other authorities that may apply to individual 
facilities, such as the CAA, the CWA, RCRA, and TSCA.
    EPA believes the evaluation of the Chemical Manufacturing industry 
demonstrates significantly reduced risk of a Fund-financed response 
action at current operations. The reduction in risks due to the 
requirements of existing regulatory programs and voluntary practices 
combined with reduced costs to the taxpayer--demonstrated by EPA's

[[Page 10145]]

cleanup case analysis, existing financial responsibility requirements, 
and enforcement actions--has reduced the need for Federally-financed 
response action at facilities in the Chemical Manufacturing industry. 
EPA looked at current industry practices, market structure and economic 
performance of the industry; analyzed cleanup cases for facilities in 
the industry; and evaluated the extent to which the industry and 
sources of releases are covered by the modern regulatory framework, the 
degree to which taxpayers have been called upon to pay for cleanup, and 
EPA enforcement history in the industry.
    As discussed in section VII.A, EPA identified the cleanup cases 
that occurred under the modern regulatory framework and also entailed 
some Fund expenditure. There were 34 sites that indicated the potential 
for a significant impact to the Fund while operating under the modern 
regulatory framework. For context, there are approximately 13,480 
establishments currently operating in the industry. Thus, this is a 
relatively small number of cases in comparison to the size of the 
industry. Moreover, EPA estimates the total fund expenditure amount at 
the 34 sites (including 30 removal sites and 4 NPL sites) is 
approximately $104 million (through 2017).\85\ This amount of 
expenditures is only a fraction of just one year's Superfund budgetary 
authority. For example, the FY 2018 Superfund budget authority was 
$1.057B.\86\
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    \85\ This expenditure figure reflects only expenditures from the 
Hazardous Substances Response Trust Fund (aka Superfund) designated 
as non-special account expenditures through 2017. For example, the 
projected costs through 2020 for Mississippi Phosphate is $133 
million (according to the April 2018 Action Memorandum), compared to 
the $8 million expended through 2017. It is anticipated that 
significant additional expenditures will occur at some of these 
sites. As such, the ultimate taxpayer burden may be significantly 
higher.
    \86\ See U.S. EPA. May 2017. Fiscal Year 2018 Budget in Brief. 
Accessed April 2019. Available: https://www.epa.gov/sites/production/files/2017-05/documents/fy-2018-budget-in-brief.pdf.
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    The language in Section 108(b) on determining the degree and 
duration of risk and on setting the level of financial responsibility 
confers a significant amount of discretion on EPA. In the past, some of 
the risks associated with spills resulted from, or were exacerbated by 
cleanups not being undertaken in a timely fashion. However, under the 
modern regulatory framework, requirements such as the Risk Management 
Plan under the CAA, the Emergency Action Plan under OSHA, and RCRA 
requirements for TSDFs to detect, contain, and clean up any leaks, 
including facility-wide corrective action--all help to ensure timely 
responses to releases. In addition to the requirements for facilities 
to respond to spills in a timely fashion, the public can alert the 
Federal government to releases by calling the National Response Center 
(NRC), which is a part of the Federally established National Response 
System and staffed 24 hours a day by the U.S. Coast Guard. The NRC is 
the designated Federal point of contact for reporting all oil, 
chemical, radiological, biological and etiological discharges into the 
environment, anywhere in the United States and its territories.
    Only 34 sites (discussed in detail in Section VII.A) had 
significant releases or threatened releases of hazardous substances 
under the modern regulatory framework and required more than minimal 
taxpayer-funded cleanups. It is EPA's assessment that the small set of 
Federally-funded cleanup cases due to recent contamination, in view of 
the size of the industry, does not warrant the imposition of costly 
financial responsibility requirements on the entire Chemical 
Manufacturing industry under CERCLA Section 108(b).
    EPA acknowledges that regulations do not always prevent releases, 
and the risk of a release is lessened but never eliminated by existing 
Federal and state environmental regulations. However, EPA believes that 
the network of Federal and state regulations applicable to the Chemical 
Manufacturing industry creates a comprehensive framework that applies 
to prevent releases that could result in a need for future cleanup. 
This is reflected in the relatively small Fund burden associated with a 
relatively small number of Fund financed cleanups at Chemical 
Manufacturing industry sites where pollution occurred under the modern 
regulatory framework. Numerous Federal programs have been established 
under several environmental statutes since CERCLA was enacted on 
December 11, 1980. These include programs under RCRA, which require 
proper management and disposal of hazardous wastes; under TSCA, which 
regulates the manufacture and sale of chemicals; under FIFRA, which 
require the proper handling and use of pesticides; and under both the 
CWA and the CAA, which address releases to water and air. In addition 
to these Federal programs, some states have stricter or additional 
standards beyond Federal requirements.
    In addition to these Federal programs, some states with significant 
chemical manufacturing industries have stricter or additional standards 
beyond Federal requirements. These Federal and state programs are 
discussed in detail in Section VII.B and in the background document, 
which is available in the docket for this rulemaking.\87\
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    \87\ Summary Report: Federal and State Environmental Regulations 
and Industry Voluntary Programs in Place to Address CERCLA Hazardous 
Substances at Chemical Manufacturing Facilities.
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    In addition, enforcement settlements and judgments that force 
return to compliance are important components of the applicable 
regulatory structure. EPA's analysis of enforcement history shows that 
enforcement of the applicable regulations provides a lever to monitor 
compliance, obtain responsible party cleanups, and recover financial 
penalties. Federal and state regulatory programs, backed up by 
enforcement and complemented by industry voluntary practices, have 
improved public health and the environment significantly since CERCLA's 
initial adoption nearly 40 years ago. EPA believes that within the 
Chemical Manufacturing industry, this framework provides effective 
controls which protect public health, welfare, and the environment.
    Examination of market structures for the Chemical Manufacturing 
industry further indicates comparatively low likelihood of default on 
environmental obligations at the expense of taxpayers and the 
government by companies in this industry. This economic performance, 
combined with the low impact to the Fund by facilities with releases 
that happened under the modern regulatory framework, suggests that the 
degree of risk to the Fund by this industry does not rise to a level 
that warrants imposing CERCLA Section 108(b) financial responsibility 
requirements.
    In summary, EPA has analyzed the need for financial responsibility 
based on risk of taxpayer funded cleanups at facilities in the Chemical 
Manufacturing Industry operating under modern management practices and 
modern environmental regulations, i.e., the type of facilities to which 
financial responsibility regulations would apply. That risk is 
identified by examining Superfund cleanup cases associated with the 
industry, the management of hazardous substances at facilities in the 
industry, as well as by examining Federal and state regulatory controls 
on that management and Federal and state financial responsibility 
requirements.
    Based on that examination, EPA is proposing that, in the context of 
CERCLA section 108(b), the degree and duration of risk associated with 
the modern production, transportation, treatment, storage or disposal 
of hazardous substances by the Chemical Manufacturing Industry does not

[[Page 10146]]

present a level of risk of taxpayer funded response actions that 
warrant imposition of financial responsibility requirements for this 
sector. For these reasons, EPA is proposing today to not issue 
financial responsibility requirements under CERCLA Section 108(b) for 
this industry.

A. Solicitation of Public Comment on This Proposal

    EPA solicits comments on all aspects of today's proposal. EPA is 
specifically interested in receiving comments on several issues and 
requests the following information:
     Examples of Chemical Manufacturing industry related 
response actions for releases which took place under the modern 
regulatory framework, for which potentially responsible parties (PRPs) 
did not lead the response at the facility.
     Examples of Chemical Manufacturing industry related 
response actions for releases which took place under the modern 
regulatory framework, for which PRPs have not taken financial 
responsibility for their environmental liabilities.
     Information on state-lead or other Federal agency cleanups 
or instances of natural resource damages associated with this industry 
that may supplement the information on cleanups gathered and analyzed 
for this proposal.
     Information about existing Federal, state, tribal, and 
local environmental requirements applicable to the Chemical 
Manufacturing industry relevant to the prevention of releases of 
hazardous substances that were not evaluated as part of this proposal.
     Information about financial responsibility requirements 
applicable to Chemical Manufacturing industry that were not evaluated 
as part of this proposal.

IX. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive 
Order 13563: Improving Regulation and Regulatory Review

    This action is a significant regulatory action that was submitted 
to the Office of Management and Budget (OMB) for review, because it may 
raise novel legal or policy issues [3(f)(4)]. Any changes made in 
response to OMB recommendations have been documented in the docket for 
this rulemaking. EPA did not prepare an economic analysis for the 
proposed rule, since this action proposes no regulatory requirements.

B. Executive Order 13771: Reducing Regulation and Controlling 
Regulatory Costs

    This proposed rule is not subject to the requirements of Executive 
Order 13771 (82 FR 9339, February 3, 2017) because this proposed rule 
would not result in additional cost.

C. Paperwork Reduction Act (PRA)

    This action does not propose an information collection burden under 
the PRA, because this action does not propose any regulatory 
requirements.

D. Regulatory Flexibility Act (RFA)

    I certify that this action will not have a significant economic 
impact on a substantial number of small entities under the RFA. This 
action does not propose any new requirements for small entities.

E. Unfunded Mandates Reform Act (UMRA)

    This action does not contain any unfunded mandate as described in 
UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect 
small governments, because this action does not propose any regulatory 
requirements.

F. Executive Order 13132: Federalism

    This action does not have federalism implications. It will not have 
substantial direct effects on the states, on the relationship between 
the Federal Government and the states, or on the distribution of power 
and responsibilities among the various levels of government, since this 
action proposes no new regulatory requirements.

G. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    This action does not have tribal implications as specified in 
Executive Order 13175, because this action proposes no regulatory 
requirements. Thus, Executive Order 13175 does not apply to this 
action.

H. Executive Order 13045: Protection of Children From Environmental 
Health and Safety Risks

    This action is not subject to Executive Order 13045 because it is 
not economically significant as defined in Executive Order 12866, and 
because EPA does not believe the environmental health or safety risks 
addressed by this action present a disproportionate risk to children, 
since this action proposes no regulatory requirements.

I. Executive Order 13211: Actions That Significantly Affect Energy 
Supply, Distribution, or Use

    This action is not a ``significant energy action'' because it is 
not likely to have a significant adverse effect on the supply, 
distribution or use of energy, since this action proposes no regulatory 
requirements.

J. National Technology Transfer and Advancement Act

    This rulemaking does not involve technical standards.

K. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations

    EPA believes that this action is not subject to Executive Order 
12898 because it does not establish an environmental health or safety 
standard, since this action proposes no regulatory requirements.

List of Subjects in 40 CFR Part 320

    Environmental protection, Financial responsibility, Hazardous 
substances, Chemicals.

    Dated: February 10, 2020.
Andrew R. Wheeler,
Administrator.
[FR Doc. 2020-03401 Filed 2-20-20; 8:45 am]
 BILLING CODE 6560-50-P


