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03.26.2024 Legal News

"Risky Businesses" Beware - EPA's New Risk Management Plan Requirements Could Bite

Under the Clean Air Act, facilities that present a high risk of chemical accidents, including those engaged in industries such as chemical manufacturing, paper manufacturing, and warehousing and storage, are required to prepare and implement a Risk Management Plan (RMP). In particular, if a facility holds more than a threshold quantity amount of a regulated substance in a process, an RMP must be submitted to the EPA and updated every five years. 

Certain changes may also trigger updating an RMP sooner, for example, if EPA adds a new chemical to the list of regulated substances, a revised RMP must be submitted by a facility within three years of that chemical's list date. 

EPA's goal of requiring facilities to prepare an RMP is two-fold: to prevent a chemical accident and to prepare for a chemical accident. To that end, EPA's regulations require RMPs to contain a wide variety of information and analyses relating to assessing the hazards at a facility, assessing a facility’s accident history, evaluating worst-case scenarios, developing an emergency response program, and implementing safety precautions, training and monitoring geared toward prevention.

In an effort to "further protect human health and the environment from chemical hazards," EPA recently finalized a rule (Safer Communities by Chemical Accident Prevention - Risk Management Program Final Rule) that significantly bolsters the requirements for RMPs. Some of these additional requirements, including installing backup power for monitoring equipment, third-party audits, and employee participation, must be complied with by May 10, 2027. Other new requirements, including identifying declined recommendations relating to natural hazards, siting, and power loss, in an updated RMP, must be completed by May 10, 2028. Several of these new requirements are summarized in more detail below. 

Ultimately, because EPA has enforcement authority for civil and criminal penalties associated with risk management violations; and because these new requirements may require significant time, effort, and expense for initial compliance and ongoing auditing; and because these new requirements aim to raise awareness to the public (including employees) and neighboring communities regarding safety risks at affected facilities, this rule could carry a piercing "bite" if operators of such facilities are not prepared. So, "risky businesses" should beware and take the time to read, understand and implement these new requirements into their RMPs before the 2027 and 2028 deadlines. And if not currently subject to the RMP requirements, businesses may wish to exercise caution and consideration before increasing the quantity of chemicals used in processes at affected facilities — otherwise, they might find the "teeth" of this rule sinking its way into their facilities, too.

Hazard Reviews:

Facilities are already required to include in their RMPs "hazard reviews," which require identifying: (1) the hazards associated with the regulated substances at your facility; (2) the opportunities for equipment malfunctions or human errors that could cause an accidental release; (3) the safeguards used or needed to prevent such malfunctions or errors; and (4) any steps used or needed to detect or monitor releases. A hazard review must also ensure that any problems identified are resolved in a timely manner. If a major change in a process occurs, a hazard review must be conducted before the change occurs, and any problems identified in the review must be resolved before the startup of that change.

EPA's new rule now amplifies what needs to be included in a hazard review, in the following ways:

  • Standby or Backup Power: Standby or emergency power must be evaluated when considering equipment malfunction. Critically, a business must ensure monitoring equipment associated with prevention and detection of accidental releases for a "covered process" has standby or backup power to provide continuous operation. It is important to note that EPA is not requiring the implementation of standby or emergency power for the entirety of an RMP process — only the monitoring equipment — but it nevertheless is requiring facilities "to consider the appropriateness of backup power for their process and to explain decisions not to implement backup power."
  • Natural Hazards: Natural hazards that could cause or exacerbate an accidental release must now be explicitly evaluated. Natural hazards means "meteorological, climatological, environmental or geological phenomena that have the potential for negative impact, accounting for impacts due to climate change." Examples of natural hazards include coastal flooding, hurricanes, tornadoes, winter weather, heat waves, and wildfires. EPA asserts that while this component of the rule does not require businesses to implement protective measures related to these natural hazards, the agency expects businesses to make "reasonable decisions based on the information collected through this provision." In addition, EPA is requiring certain facilities to document when monitoring equipment associated with the prevention or detection of releases of covered processes is removed due to safety concerns during natural hazards. In doing so, EPA believes it will deter some businesses from justifying disabling monitoring equipment merely because of the threat of extreme weather events.
  • Siting: Facilities are now required to include siting evaluations in their hazard review, which involves looking at the placement of processes, equipment, buildings, and hazards posed by proximate or neighboring facilities, and the accident release consequences posed by the proximity to the public. EPA believes these evaluations are necessary to determine the likelihood of a secondary "knock-on" release by compromising nearby processes if and when an accident occurs. EPA is not requiring businesses to modify their footprints as a result of a siting evaluation, but is requiring businesses to evaluate these potential hazards and to use the information “reasonably” when determining what measures should be taken. Accordingly, despite considering them previously, EPA is not requiring minimal setbacks and other specific location restrictions at this time from this rulemaking.

Notably, for each of these new categories, businesses must include in their RMP submission the recommendations they declined when considering these hazards and justifications. EPA believes that requiring this documentation may reduce the risk of chemical accidents because "when local citizens have adequate information and knowledge about the risks associated with facility hazards, [facilities] may be motivated to further improve their safety performance in response to community oversight."

Third-Party Audits:

Certain facilities are required to conduct an audit of their compliance with the risk management regulations at least once every three years. Under the new rule, in some circumstances, a compliance audit must now be conducted by a third party. For example, a third-party audit is triggered when an "accidental release" from a covered process has occurred at a facility or when an implementing agency requires a third-party audit "due to conditions at the stationary source that could lead to an accidental release of a regulated substance." Notably, when an agency imposes a third-party compliance audit at an affected facility, the new rule does allow for the decision by the agency to be subject to an internal appeal by the implementing agency. But because the rule does not set forth any standard for the decision to be evaluated, it seems likely an appeal will only be successful if an operator can demonstrate that the agency's decision is unreasonable or irrational.

The new rule includes a wide variety of requirements for third-party auditors, and requires a facility to prepare a “third-party audit findings report” after an audit is conducted. This report must include:

  • A copy of the third-party's final audit report;
  • A response to each of the audit's findings;
  • A schedule for addressing deficiencies;
  • A signed certification by a senior corporate officer, indicating under penalty of law that the third-party audit requirements were complied with and that deficiencies are being corrected.

Along with this report, facilities are also required to document when and how deficiencies were addressed, including the date of implementation. These records must be maintained for five years. Additionally, like the hazard reviews, facilities must also explain in their RMP which findings from a third-party audit were declined and what justifications it considered when declining those findings.

Employee Participation

Finally, EPA's new rule creates new avenues for employees to get more involved in risk management at facilities. One of the primary changes set forth in this new rule is that facilities must develop and implement a process which allows employees to report to both the owner or operator of the facility and the EPA unaddressed hazards that could lead to a release, an accident that was not reported under the risk management regulations, or any other noncompliance with the regulations. As part of this process, employees must be able to report anonymously, and employees must be provided access to hazard reviews and all other information developed under the RMP program. Reports made by employees must be maintained for three years. 

For a full list of requirements and compliance dates for this new rule, please consult the final rulemaking here, and reach out to Williams Mullen's Environment & Natural Resources team with any questions or concerns.