Key Takeaways

• What Is Happening? On March 14, 2024, The U.S. Environmental Protection Agency (EPA) signed a final rule requiring certain facilities to develop Facility Response Plans (FRPs) for a potential worst-case discharge of Clean Water Act (CWA) hazardous substances, including planning for the threat of a worst-case discharge. Existing EPA regulations require FRPs where certain thresholds of oil are exceeded; the new rule extends the FRP requirement to cover CWA hazardous substances, among other changes. The rule takes effect on May 28, 2024, and has a 36-month implementation period. We anticipate challenges to the rule, but unless a court issues a stay, affected facilities should plan to implement the rule’s new requirements in this timeframe.
• Who Is Impacted? Affected industries include many industrial and commercial sectors and facilities that handle hazardous substances at or above current reportable quantity thresholds. These may include manufacturing and chemical plants and storage operations located near navigable waters that have an inventory of CWA-listed hazardous substances at or above threshold amounts. Facilities associated with oil and gas extraction, mining, construction, utilities, crop production, animal production and aquaculture, and support activities for agriculture and forestry, among others, could also be affected.
• What Should I Do? Facility owners and operators potentially affected by the rule should assess whether they are subject to the rule and then begin developing their facility response plans.

The rule requires Facility Response Plans for worst-case discharges of CWA hazardous substances from onshore non-transportation-related facilities that, because of their location, could reasonably be expected to cause substantial harm to the environment by discharging into or on the navigable waters, adjoining shorelines, or exclusive economic zone. Facilities within 0.5 miles of a navigable water or conveyance already subject to requirements for Spill Prevention, Control Countermeasure Plans, or FRPs for oil under 40 CFR Part 112, will want to evaluate whether their operations are or may be subject to the new requirements for hazardous substances.  

Background

The final rule is EPA’s response to the settlement of a 2019 lawsuit brought by the Natural Resources Defense Council and others. The lawsuit asserted that EPA failed to meet its statutory duty to issue regulations “requiring non-transportation-related substantial-harm facilities to plan, prevent, mitigate and respond to worst-case spills of hazardous substances.”

The Consent Decree required EPA to take final action on a rule addressing worst-case discharge plans for hazardous substances by September 2022. This final action represents EPA’s final action under the consent decree.

Applicability Criteria

EPA set forth a two-step process to determine whether the new rule applies to a facility. See 40 CFR 118.3. Specifically, the owner or operator of a covered facility must assess two screening criteria and, if both criteria are met, then assess the ability of the facility to cause substantial harm to the environment through the application of the substantial harm criteria. If an owner or operator determines that the covered facility meets one of the substantial harm criteria, the owner or operator must prepare a hazardous substance FRP in accordance with the new regulations.

• Initial Screening. These screening criteria are to be assessed concurrently, with no implied order of priority:
  1. Facility has a maximum quantity onsite of 1,000x the Reportable Quantity of CWA Hazardous Substances. The RQs published in 40 CFR Part 117 are based on a level of release of a hazardous substance that could potentially cause harm to waters. EPA’s decision to set the threshold criteria at 1000x rather than the initially proposed 10,000x the RQ represents a potentially significant expansion of the scope of the new rule.
  2. Facility is within 0.5 miles of navigable water or conveyance to navigable water.

If a facility meets the two screening criteria, it must undergo an evaluation to determine whether it meets the substantial harm criteria.

• Substantial Harm Criteria. If the two screening criteria are met, the next step is a substantial harm evaluation, which includes determining whether the facility meets one of the following four substantial harm criteria:
  1. Ability to adversely impact public water system.
  2. Ability to cause injury to fish, wildlife, and sensitive environments.
  3. Ability to cause injury to public receptors.
  4. Has experienced a reportable discharge of CWA hazardous substances that reached navigable water within the last five years.

These criteria are easily triggered under the FRP process for oil, which preexisted the new rule. For instance, an “injury” means any measurable adverse change, either long- or short-term, in the chemical or physical quality or the viability of a natural resource resulting either directly or indirectly from exposure to a discharge or exposure to a product of reactions resulting from a discharge. 40 CFR 112.2.

If both screening criteria and one or more substantial harm criteria apply, the facility must prepare and submit an FRP to EPA that includes information on each CWA hazardous substance above the threshold quantity onsite. The owner or operator must assess all substantial harm criteria.

EPA provided a summary of the applicability criteria in the final rule, which EPA illustrated as follows:

Amendments from the Proposed Rule

• In the final rule, the Agency determined that a 1,000x RQ multiplier, instead of the proposed 10,000x, will more appropriately screen for covered facilities that could cause substantial harm to the environment from a worst-case discharge. In response to comments, EPA indicated that the screening criteria, in conjunction with the substantial harm criteria, will appropriately target covered facilities that could cause substantial harm to the environment from a worst-case discharge of a CWA hazardous substance into or on the navigable waters. This change in scope from the proposed rule will likely significantly broaden the number of locations that must now complete the new assessment process for CWA hazardous substances.
• As the basis for assessing risk to the environment, the new rule requires the use of the volume by the maximum quantity onsite inventory of hazardous substances above RQs, rather than the maximum onsite container capacity. EPA made this change in the final rule based on its view that this approach will more accurately reflect the hazard posed and is consistent with how oil is measured and regulated.

• Once a facility determines it meets one of the substantial harm criteria, the owner or operator must now develop an FRP for all, not just one, of the CWA hazardous substances onsite above the threshold quantity. EPA made this adjustment by recognizing that the response and/or recovery actions may vary widely depending on which substance is released. Thus, the FRP must include information on each hazardous substance onsite that is above the threshold quantity.
• EPA added § 118.4(a)(6) to the final rule, which requires a covered facility owner or operator to review and recertify their plan Agency every five years. EPA decided that this will ensure the FRPs remain up-to-date and owners or operators remain informed of their responsibilities. This requirement is consistent with oil FRP requirements.
• EPA also added § 118.4(a)(7), requiring a facility owner or operator to evaluate or re-evaluate operations whenever EPA adds or removes a CWA hazardous substance from the list at 40 CFR 116.4 or adjusts relevant RQs as found in 40 CFR 117.3. EPA reasoned that such adjustments are made through a formal notice and comment rulemaking procedure; thus, regulated entities will have notice of these changes prior to them becoming final and effective.

Implementation and Enforcement

Facility Response Plan preparation, submission, and implementation timelines are subject to the effective date and an initial 36-month implementation period. EPA included this implementation period to allow covered facilities time to familiarize themselves with the rule requirements and prepare their plans.

• Initially-regulated covered facilities. The owner or operator of a non-transportation-related onshore facility in operation on November 30, 2026, that satisfies the applicability criteria must implement the requirements of the new regulations by June 1, 2027. 
• Newly-regulated covered facilities. The owner or operator of a non-transportation-related onshore facility in operation after November 30, 2026, that satisfies the applicability criteria must comply within six months.
• Newly-constructed covered facilities. Covered facilities starting operations after June 1, 2027, must comply prior to the start of operations, including a 60-day start-up period adjustment phase.

Appeals

Similar to current regulations for Oil FRPs, a facility that believes it is not subject to the new rule may appeal a decision by the EPA Regional Administrator determining the potential or threat of substantial harm or significant and substantial harm from a facility or, in the case of an FRP that has been prepared, the Regional Administrator’s disapproval of a CWA hazardous substance FRP. If warranted, that decision can then be appealed to the EPA Administrator.

Petitions

The public and other government agencies may also petition EPA to determine whether a CWA hazardous substance-covered facility should be required to submit an FRP to EPA. Given the breadth of the new rule relative to the long list of hazardous substances and the 1000x RQ threshold, this public participation opportunity is a significant consideration for facilities that may already be under community scrutiny for other reasons.

Beveridge & Diamond’s Water practice group develops creative, strategically tailored solutions to challenges that arise under the nation’s water laws. The firm’s attorneys have represented clients in a range of industries in project planning as well as in litigation and enforcement proceedings on issues arising from the growing convergence of water supply, use, and quality issues. For more information on these developments, please contact the authors.