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12.15.2022 Legal News

CERCLA Release Reporting Exemption for Federally Permitted Releases

Seasoned environmental professionals are well-acquainted with the typical hazardous substance release reporting analysis under CERCLA; where a reportable quantity of a hazardous substance is released into the environment within a 24 hour period, CERCLA section 103 requires a person in charge, upon gaining knowledge of the release, to report it immediately to the National Response Center. CERCLA enforcement actions for failure to timely report releases are common and costly. However, when facing potential release reporting obligations, it is important for environmental professionals not to overlook the broad, but often misconstrued, exemption from CERCLA section 103 reporting for releases that are considered “federally permitted.”

An otherwise reportable release that is considered a “federally permitted release” is exempt from section 103 reporting. CERCLA defines “federally permitted release” to include “discharges in compliance with a permit” under the Clean Water Act, “releases in compliance with a legally enforceable final permit” under RCRA, “any injection of fluids authorized under” the Safe Drinking Water Act, “any release ... in compliance with a legally enforceable license, permit, regulation, or order” under the Atomic Energy Act, or “any emission into the air subject to a permit or control regulation under” the Clean Air Act. For many years, EPA’s interpretation of this definition has confused industry and environmental professionals.

First, EPA guidance states the agency’s position is the exemption applies even where the total amount of hazardous substance released exceeds the reportable quantity (“RQ”) for that substance, but the amount released in excess of the permitted limit does not exceed the RQ. For example, where an NPDES permit contains an effluent limitation of 1.0 lb. for ABC chemical and the RQ for ABC is 1.5 lb., a release of 2.0 lbs. of ABC into the environment would be considered a “federally permitted release” and exempt from CERCLA reporting. Although the total amount of ABC released exceed the RQ of 1.5 lb., because the amount of ABC released in excess of the permit limit was only 0.5 lb., EPA guidance suggests the release is not reportable. Considering such a release “in compliance with” the NPDES permit and thereby an exempt “federally permitted release” allows the NRC to avoid numerous, unnecessary reports of small permit excursions, which are better addressed by the permitting authority.

In addition, historic EPA guidance suggests there is essentially no difference between the phrases “in compliance with” and “subject to” in the statutory definition, stating CERCLA “generally limits the federally permitted release exemption to those release[s] ‘in compliance with’ permitted regulatory requirements.” For many years, EPA’s practice was to ignore CERCLA’s clear distinction between CWA/RCRA (“in compliance with”) releases and Clean Air Act (“subject to”) releases. EPA’s justification for this interpretation was that to hold otherwise would render virtually all air emissions, including dangerous episodic releases, exempt from CERCLA reporting.

Some clarity was gained in 2021, when the U.S. Court of Appeals for the Third Circuit considered a challenge to the above interpretation. The case (Clean Air Council v. United States Steel Corp., 4 F.4th 204 (3d Cir. 2021)) involved a U.S. Steel facility, which experienced two fires, resulting in the shutdown of certain air quality control equipment and subsequent releases of hydrogen sulfide in excess of permitted limits. The facility reported these releases to the County health department as required by its CAA permit, but did not report the releases to the NRC. The Clean Air Council sued, claiming the releases where not “subject to” the CAA Permit because they violated permit limits, and were therefore not exempt federally permitted releases. The case hinged on the meaning of the phrase “subject to.” The court stated in context, “subject to” cannot mean “obedient to” as suggested by CAC. The only paragraph in the definition of “federally permitted release” that uses the phrase “subject to” is the paragraph addressing CAA releases. The court reasoned, “[w]hen Congress uses a particular phrase in one section of a law but not in another section of the same law, we presume that it included it in one place and excluded it from the other intentionally.” The court further noted there are several other examples in the CAA and CERCLA where Congress used both phrases (“in compliance with” and “subject to”) in the same provision, and to attribute the same meaning to both phrases would render such provisions redundant or meaningless. Ultimately, the court held the term “subject to” means “governed or affected by.” Releases of hazardous substances into the air in excess of an RQ above permitted limits are still considered “federally permitted” and exempt from CERCLA reporting because they are still “subject to” or are still “governed by” the permit.

Although the precedential value of the U.S. Steel decision is limited to the Third Circuit, the case is significant in that it reverses more than 30 years of EPA policy on the issue of federally permitted releases. The decision may also serve as a catalyst for EPA to revisit its guidance on this useful, but often overlooked, exemption from CERCLA reporting requirements.

Clean Air Council v. United States Steel Corp., 4 F.4th 204 (3d Cir. 2021)