The Obama administration had begun an earlier effort to require financial assurance in those sectors, but it did not reach the proposed rule stage, Lisa Evans, senior counsel for advocacy group Earthjustice, told ENR.

CERCLA requires cleanup of contaminated sites and reduced risk of future environmental disasters—making polluters liable for remediation and establishing a fund to cover costs at abandoned sites through a tax on petroleum and chemical products, which Congress later discontinued. Since 2001, most hazardous waste cleanup has generally been taxpayer funded, although it has been under-funded, observers say.

The law requires EPA to develop regulations for certain “classes” of facilities to establish and maintain a level of financial responsibility “consistent with the degree and duration of risk associated with the production, transportation, treatment, storage, or disposal of hazardous substances.”

EPA Discretion

But CERCLA also gave EPA discretion to decide which industries must show they have the financial means to address environmental pollution they cause, Evans said. She terms that discretion “ridiculous and dangerous” because harmful waste spills could occur as a result.

The U.S. Government Accountability Office in 2005 recommended that EPA implement a financial assurance mandate for businesses that handle hazardous substances but it has yet to do so for any industry. The agency only requires the assurance, such as bonds or money in escrow, for environmental cleanup by hazardous waste producing industries under a separate federal law, RCRA.

In the notice, EPA says it had examined the experience of the federal Superfund waste cleanup program in the exempted industries—concluding that each now operates under a modern regulatory framework and does not present a level of risk that warrants financial responsibility required by CERCLA. EPA maintains that it still has authority to take enforcement actions if needed.

According to Earthjustice, EPA’s decision means that coal-fired power plants do not have to provide financial assurances for risks related to toxic coal ash waste they produce. The group and others have cited EPA’s financial analysis that show a high risk of default among companies that own coal-fired power plants. The agency countered that economic conditions of the industry as a whole are not at undue risk.

Earthjustice argued that the regulatory framework is not specific enough to be protective. “EPA’s no-action proposal places the public at risk of exposure to toxic pollutants, and at risk for the cost of cleaning up these facilities.” The group contends that EPA’s decision is based on a flawed interpretation CERCLA that “narrowly focuses” on financial risks to the Superfund site trust fund, while ignoring the law’s broader goals of making the polluter pay and protecting human health and the environment.

Advocates note the need for financial assurance requirements because of significant risks of groundwater contamination, and in some cases catastrophic dam failure at coal ash dump sites that have occurred since 2008.

Earthjustice also cited emails it obtained through the Freedom of Information Act that show Trump EPA appointees had decided, early in the process without any analysis, not to regulate the industries. Based on available data, it will ask the Biden Administration to rescind the decision, Evans says

Community Projects Nixed

In a separate action, the U.S. Justice Dept. on Nov. 24 defended in a Boston federal court its new position to no longer include a “supplemental environmental project” in an environmental lawsuit settlement unless explicitly authorized by law.

Known as a SEP, the project is an environmentally beneficial added investment that a defendant agrees to in exchange for a lower civil penalty. SEPs are not directly related to environmental infractions being settled but offset harm they have caused, EPA says.

Congress has never prohibited use of SEPs, but it has never required them. Justice now says exchanging beneficial projects for a lower penalty diverts money from the government in violation of law and sound public policy.

Until recently, both EPA and Justice included SEPs in many settlements. But the legality of their use remained an open question, DOJ said in a motion to dismiss a complaint filed in October by the Conservation Law Foundation. The advocacy group says the new Justice policy to eliminate SEPs is an arbitrary, unreasoned and unlawful interpretation of the law and long-standing federal policy.

“These devices have had bipartisan support from the regulatory and environmental community for decades,” Travis Annatoyn, an attorney representing the group, told ENR. The new policy will have significant effects on communities, particularly in the Boston area, where SEPs have been used frequently over the years, he said, noting benefits that directly addressed air and water pollution.

SEPs can and have been tailored to protect children’s health, drive technological innovation, and mitigate the effects of climate change, the foundation complaint says. During the George W. Bush administration, EPA agreed to SEPs in 15 settlements with electric power companies, prompting significant new renewable energy generation and pollution control and mitigation. By 2011, EPA had entered into SEP settlements totaling nearly $400 million, the complaint says.

Justice argued that the foundation complaint involves a “hypothetical future settlement that is too generalized and abstract to warrant federal court jurisdiction.”

The agency said there is no federal court authority to order a prosecutor to settle a case—let alone to include SEPs. The foundation complaint countered that SEPs remain a still-viable settlement element that can reduce “more acute threats to local residents.” Briefings in the case are expected in early February.