On March 1, 2024, Biden’s Environmental Protection Agency (EPA) announced new costly obligations for owners and/or operators of facilities that operate under the Clean Air Act Risk Management Program (RMP). The final Safer Communities by Chemical Accident Prevention Rule requires owners and/or operators of covered processes to make significant changes to their preexisting RMP compliance plans, including complying with more stringent requirements for accident prevention, emergency preparedness, and public disclosure of information related to accidental releases. Compliance with the rule is expected to entail significant capital expenditures. EPA estimates the annualized costs of implementation of the Rule’s requirements to range between $260 million and $300 million, although actual implementation costs of such regulations are often higher. The Final Rule is expected to be challenged by various businesses.
While the RMP requirements largely parallel the Occupational Safety and Health Administration (OSHA) Process Safety Management (PSM) program that focuses on employee safety at workplaces, the RMP places emphasis on the prevention of accidental releases of regulated chemical substances and the consequences of those accidental releases on human health and the environment in surrounding communities. While that sounds laudable on the surface, the actual implementation and the associated costs, benefits, and potential broader consequences of the individual requirements should have been taken into consideration when the rule was formulated.
EPA enforces RMP compliance through administrative, civil, and criminal enforcement, often in conjunction with the Clean Air Act (CAA) General Duty Clause. In those enforcement proceedings, EPA can impose the new obligations in the Rule before the formal compliance deadlines through negotiated consent decrees–a strategy the agency has used in other regulations, including prior iterations of the RMP regulation. The new rule reintroduces key changes from past rulemakings of the Obama administration that never took effect.
According to the American Petroleum Institute, the EPA did not demonstrate a need for its rigid approach in the rule, which could have adverse impacts to workers and consumers by undermining ongoing safety improvements, impacting energy production, and diminishing the ability of U.S. refineries to compete in global markets. For example, refineries, already constrained by onerous regulations that have resulted in closures or conversion of refineries to produce biofuels, could see their gasoline output reduced because the final rule incudes a requirement intended to discourage the use of HF alkylation technology. Hydrofluoric (HF) acid is one of two primary catalysts used to make alkylate–a critical ingredient for clean, low-emission gasoline production. In using HF, refiners take major precautions and employ prevention, detection, and containment strategies to keep their workforces and communities safe. Numerous other industries also use hydrofluoric acid safely (e.g. the electronics and semiconductor industry, chemical manufacturing, glass manufacturing, pharmaceutical industry, agriculture, nuclear fuel processing, laboratory research). While U.S. refiners account for only 2 percent of global HF demand, the Biden administration seems to be specifically targeting the U.S. refining sector.
According to EPA, phasing out HF or switching to an alternative may require construction of a new alkylation unit, and depending on the production levels of the refinery, implementation of an alternative could cost between $35 million and $900 million, and possibly result in refinery closures. Discouraging the use of the catalyst also makes U.S. refiners less competitive with foreign companies, especially as China has surpassed the United States in refining capacity in 2022.
Because oil and gas companies devote substantial resources to assuring safe operations through numerous programs, technical standards, training and information sharing activities, the U.S. oil and gas industry consistently ranks as one of the safest industries in the United States, with occupational injuries and illnesses significantly lower than the rest of the U.S. private sector.
The Rule’s Key Changes
The final rule expands the accident prevention program requirements, especially the process hazard analysis (PHA).
- Petroleum refineries, chemical plants, and coal product manufacturing facilities are required to include in their Process Hazard Analysis (PHA) a Safer Technology and Alternatives Analysis (STAA) evaluation to address the risk of regulated substances, substitute less-hazardous substances, moderate the use of regulated substances, or simplify RMP-covered processes to further prevent or mitigate the effects of accidental releases. The Final Rule also requires three categories of RMP facilities to conduct inherently safer technologies and designs (IST/ISD) assessments and document justifications when recommendations from those assessments are not implemented: (1) petroleum refineries and chemical manufacturing facilities located within one mile of each other, (2) refineries with hydrofluoric acid processes, and (3) facilities that had had reportable accidents since the facility’s last PHA was conducted. These three categories of facilities must also perform IST/ISD analyses, which means these facilities must implement at least one passive measure, equally protective active measure, or procedural control after each STAA, provided that such measures are “practicable.” This latter requirement is an about-face from the proposed rule and several prior rulemakings from the Obama administration, all of which emphasized that implementation of IST/ISD should be determined by the owner and operator based on site-level consideration of risk and other factors.
- Third-party audits are required for the facility’s next scheduled triannual compliance audit following an RMP-reportable release. Facilities must include written justification in their RMP plans if recommendations from those third-party audits are not adopted. Third-party audit reports must be provided directly to the audit committee of the board of directors. As such, EPA is entering into corporate governance and board-level reporting requirements, which are functions associated with the Securities and Exchange Commission and laws such as the Sarbanes-Oxley Act.
- The Rule mandates employee participation in resolving findings and recommendations from PHAs, compliance audits, and incident investigations. As part of this requirement, owners and/or operators of facilities are required to consult with employees knowledgeable of covered processes when implementing or deciding to not implement evaluation recommendations and must clearly outline employee participation requirements in employee participation plans. Employee participation plans are to include opportunities to anonymously report RMP-reportable releases or noncompliance and information on “stop work” procedures. The Final Rule requires that owners and/or operators provide training on the employee participation plans.
- The development of public disclosure procedures at certain RMP facilities and the disclosure of certain accidental release-related data to local responders are required. It imposes an obligation on owners and/or operators to partner with local responders and document that partnership to ensure that a community notification system is established and operative should a reportable accidental release occur.
- Facilities must provide certain chemical hazard information, available on request, to surrounding communities, including any member of the public residing, working, or otherwise spending significant time within a six-mile radius from the facility. As part of this requirement, facilities must provide this information in at least two major languages used in the community other than English. Provided information must include the regulated substances used at the facility, the facility’s accident history, information on the facility’s emergency response program, and information on the facility’s emergency response exercises, among other information.
- The evaluation of the practicability of implementation of a safer technology or design is first to be based on technological, environmental, legal, and social factors, with economic considerations evaluated last. The practicability assessment is to be documented with the technological, environmental, legal, social and economic factors outlined, along with any methods or processes used to determine practicability. The PHA must be updated and revalidated at least every 5 years, which provides the owner or operator opportunities to evaluate the practicability of implementation since the last PHA review. EPA contends that 5-year revalidation will give the owner or operator the opportunity to identify new risk reduction strategies, as well as revisit strategies that were previously evaluated to determine whether they are now practicable as a result of changes in cost and technology.
- Owners and/or operators must account for risks related to natural hazards — including meteorological, environmental, and geological phenomena such as wildfires and earthquakes — and loss of power in facility hazard analyses.
The Final Rule also includes numerous other regulatory amendments, including requirements for root cause analyses, facility siting, certain process safety information, requirements regarding the scope and timing of emergency response field exercises, and requirements relating to the retention of hot work permits. The Rule’s compliance deadline is 3 years and 60 days after publication in the Federal Register.
Conclusion
The Biden administration has imposed another regulation that creates unnecessary red-tape and compliance burdens, yet does not inherently improve the safety of employees or communities. Rather, it increases the cost of operation for companies that must comply, which increases prices for Americans as the additional costs are passed on through the final products. With this regulation, EPA is putting more barriers on U.S. fuel and petrochemical production as its requirements are a litany of costs. The EPA’s Rule unjustifiably singles out HF alkylation at American refineries—an essential step in the manufacture of high-octane components used to produce cleaner-burning gasoline–in spite of the refining industry’s long record of safely managing HF operations. Unfortunately, the benefits of the Rule have not been demonstrated by EPA, making it appear that the Biden administration wants to add unnecessary burden to U.S. businesses, hurting their operations and the health of the U.S. industrial sector in doing so.
