Environmental Alert

Date: May 31, 2012

EPA Issues Final Rule on 8-Hour Ozone NAAQS
On May 14, 2012, the U.S. Environmental Protection Agency ("EPA" or "Agency") promulgated a final rule amending the Phase 1 Rule for implementing the eight-hour ozone National Ambient Air Quality Standard ("NAAQS") (0.08 parts per million) under the Clean Air Act ("CAA"). The revisions, which will become effective on June 13, 2012, address portions of the 2004 ozone NAAQS vacated by the U.S. Court of Appeals for the District of Columbia Circuit in South Coast Air Quality Management District v. EPA, 472 F.3d 882 (D.C. Cir. 2006). The new rule reclassifies 16 nonattainment areas of the country, originally classified under the 2004 rule as Subpart 1 areas, as subject to the more stringent Subpart 2 area requirements, and reinstates the 1-hour contingency measures that apply until a nonattainment area meets the ozone standard. It also removes from the anti-backsliding requirements exemptions that were vacated by the court. Despite requests from commenters, EPA declined to change the attainment periods for the reclassified nonattainment areas, noting that both Subpart 1 and Subpart 2 areas are required to reach attainment as expeditiously as practicable. This rulemaking will affect owners and operators of sources of emissions of volatile organic compounds ("VOCs") and nitrogen oxides ("NOX"), the two pollutants that contribute to ground-level ozone, as they will have to comply with revised standards under State implementation plans ("SIPs").

Bureau of Land Management Proposes Hydraulic Fracturing Regulations
On May 11, 2012, the Bureau of Land Management ("Bureau" or "BLM") published a proposed rule to regulate hydraulic fracturing on Federal and Indian lands. The proposed rule would revise BLM's regulations so that 43 C.F.R. § 3162.3-3 exclusively covers "well stimulation" operations, including acidizing and hydraulic fracturing, and § 3162.3-2 covers all other well injection activities. Through this rule, the Bureau seeks to "modernize" BLM hydraulic fracturing regulations, which were last revised in 1988, by adopting certain "best practices," including: (1) requiring public disclosure of the chemicals used in well stimulation fluid; (2) strengthening wellbore integrity standards; and (3) requiring operators to implement appropriate plans for managing flowback waters, including storage and disposal or treatment. According to the Bureau, its proposed rule is "consistent with the American Petroleum Institute's ("API") guidelines for [hydraulic fracturing] well construction and well integrity." BLM estimates that about 90 percent of wells drilled on Federal and Indian lands - approximately 3,400 wells per year - are stimulated by hydraulic fracturing. Comments are due July 10, 2012.

EPA Issues Highly Anticipated Draft Permitting Guidance for Hydraulic Fracturing Wells Using Diesel
In a May 10, 2012, Federal Register notice, EPA announced the availability of its draft permitting guidance for oil and gas hydraulic fracturing wells using diesel fuels under the Safe Drinking Water Act's ("SDWA") Class II Underground Injection Control ("UIC") Program. The most controversial issue in EPA's development of this guidance has been the potentially broad definition of "diesel fuels." Although the guidance is only intended for EPA permit writers, if States with delegated permitting authority choose to defer to this Federal guidance, a broad definition of diesel fuels would require permitting of some activities not currently covered under several State UIC Programs. Indeed, a number of states do not apply Class II UIC regulations to hydraulic fracturing operations on grounds that these requirements, designed to account for permanent waste storage, are ill-fitting for such temporary injections. In its draft guidance, EPA ultimately pursued a less inclusive definition of diesel. The guidance identifies only six Chemical Abstracts Service Registry Numbers because either their primary names or their common synonyms contain the term ‘‘diesel fuel'' and they meet the chemical and physical properties of ‘‘diesel fuel,'' as defined in the Toxic Substances Control Act ("TSCA") Inventory. As the notice also presents the more expansive definition of "diesel fuels" EPA initially considered, the possibility remains that the Agency may pursue this option. The guidance also addresses and seeks comments on diesel fuels usage information, permit duration, well closure, area of review, information submitted with the permit application and monitoring. Comments are due July 9, 2012.

EPA Restricts Significant New Uses for Chemical Substances
Through a direct final rulemaking, EPA recently promulgated Significant New Use Rules ("SNURs") under TSCA for 119 new and existing chemical substances that were the subjects of premanufacture notices ("PMNs") dating from 2000 through 2011. The rule covers four new substances subject to ‘‘risk-based'' TSCA § 5(e) consent orders, and 115 existing substances that EPA determined could be used in a way not described in the PMN, which could result in increased exposures. The Agency will accept comments on these SNURs until May 29, 2012. This action follows EPA's issuance of SNURs on April 25, 2012, for 23 chemical substances, nine of which are subject to TSCA § 5(e) consent orders (comments due on May 25, 2012), and April 4, 2012, for 17 chemical substances, two of which are subject to TSCA § 5(e) consent orders (comments due May 4, 2012). Earlier last month, EPA also announced it would hold a public meeting on May 16, 2012, to discuss its October 21, 2011, proposed rule to require testing of 23 high production volume ("HPV") chemicals under TSCA § 4 and to issue SNURs for a different set of 22 HPV chemicals. Any person intending to manufacture, import or process any chemical substance subject to a SNUR for a designated significant new use must file a significant new use notice with EPA ninety days prior to commencing such activity.

OMB Seeks Public Comments on Federal Involvement with Voluntary Consensus Standards and Conformity Assessment Activities
The Office of Management and Budget ("OMB") invited the public to weigh in on whether and how OMB should supplement Circular A-119 concerning "Federal Participation in the Development and Use of Voluntary Consensus Standards and in Conformity Assessment Activities," in light of new issues that have emerged since the Circular was issued in 1998. OMB developed Circular A-119 in response to the National Technology Transfer and Advancement Act of 1995, which required Federal agencies to use voluntary consensus technical standards as a means to carry out policy objectives except when an agency determines that such use is inconsistent with applicable law or is otherwise impracticable. To date, the primary approach for Federal involvement in standards development has been to rely on private sector leadership, supplemented by Federal contributions to discrete standardization processes. However, on January 17, 2012, OMB, the Office of Science and Technology Policy and the U.S. Trade Representative issued a memorandum instructing Executive departments and Federal agencies to actively engage or convene standards development and implementation in limited policy areas where a national priority has been identified in a statute in order to "help catalyze advances [in standards development], promote market-based innovation, and encourage more competitive market outcomes." According to the memorandum, such national priorities include achieving breakthroughs in health care technology and promoting clean energy. Although comments were initially due March 30, 2012, OMB announced at a May 15, 2012, workshop that it would continue to accept comments until June 1, 2012. The Office of the Federal Register ("OFR") is also continuing to accept comments until June 1, 2012, on a petition to amend OFR's Incorporation By Reference regulations at 1 C.F.R. part 51 to include several requirements related to the statutory obligation that material incorporated by reference be reasonably available.