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US EPA periodically issues compliance advisories and enforcement alerts that highlight the agency’s enforcement efforts related to specific regulations and regulatory provisions. One recent EPA enforcement alert targets air emissions from stationary engines subject to the RICE NESHAP under 40 CFR Part 63, Subpart ZZZZ and new source performance standards in 40 CFR Part 60

As anticipated, on Friday the U.S. Environmental Protection Agency (EPA) issued a proposed Risk Management Program (RMP) Safer Communities by Chemical Accident Prevention rule pursuant to the Clean Air Act. The proposed rule would reinstate certain provisions newly introduced to the RMP rule (originally promulgated in 1991) late in the Obama administration and subsequently removed by the Trump administration in 2019.  The EPA has additionally added significant new requirements not originally in the 2017 draft RMP rule, including provisions aimed to further current policies on environmental justice and climate change.  The proposed RMP rule also appears to draw influence from recommendations made by the Chemical Safety Board (CSB) as well as state updates to process safety regulations in the past decade, most notably the California Accidental Release Prevention Program (CalARP) and the California Refinery Process Safety Management (PSM) Standard. 

These changes, including the addition of requirements regarding employee participation, public availability of information, inherent safety, third party auditing, facility siting and natural hazards consideration, as well as emergency response planning, will result in covered RMP facilities having to significantly revisit and revise their RMP programs and plans.  Certain requirements also appear to be directly aimed at limiting stationary sources’ ability to privately manage their internal risk management decisions.  For example, covered facilities would now be required to document any revisions between draft and final compliance audits and provide justifications for rejected RMP program recommendations.

According to EPA Administrator Michael Regan, “protecting public health is central to EPA’s mission, particularly as we adapt to the challenges of climate change, and the proposal announced today advances this effort, especially for those in vulnerable communities.  This rule will better protect communities from chemical accidents, and advance environmental justice for communities that have been disproportionately impacted by these facilities.”  EPA estimates the rule will cost approximately $77 million a year.

Comments on the proposed rule are due to EPA within 60 days of its publication in the Federal Register and may be submitted online, via mail, or hand-delivery.

Continue Reading EPA Proposes Expansive Changes to EPA RMP Rule

The regular session of the Texas Legislature came to a fraught end on May 31, 2021. The political spectacle in recent days capped off a legislative session dramatically interrupted by a winter storm in February that crippled much of the state with snow, ice, and power outages. That natural disaster led to intense scrutiny of the state’s power distribution infrastructure and calls to weatherize the power grid.

In response, the Texas Legislature approved legislation aimed at addressing some of the infrastructure issues caused by the storm. The Legislature’s response to the storm understandably received much attention. Perhaps this allowed another energy infrastructure bill—one that makes a big statement in terms of energy and climate policy—to pass without similar attention.

House Bill 17 passed the Texas Legislature earlier this year and was signed into law by Governor Abbott on May 18, 2021. The law prohibits Texas localities from restricting or discriminating against utility infrastructure based on the type or source of the energy delivered to the end-use customer. The law also prohibits Texas localities from imposing additional charges on development and building permit applicants that encourage or discourage the installation of infrastructure based on the type or source of energy. While not expressly stated, the intent of the bill is to prohibit localities from phasing out natural gas and its infrastructure.

Continue Reading Texas keeps the gas taps flowing, but will others do the same as energy infrastructure takes center stage?

The U.S. Chemical Safety Board (“CSB”), the federal agency created under the Clean Air Act Amendments of 1990 and charged with investigating industrial chemical releases, has announced that it will draw up a new board following a recommendation to do so by the Environmental Protection Agency (“EPA”) Office of the Inspector General (“OIG”). The CSB

Reed Smith’s U.S. based environmental team recently held a CLE webinar on what US environmental, health and safety legal and regulatory changes we can expect in 2021.  The webinar provided an insightful discussion on environmental policy and topics including:

  • Environmental Policy With Biden Win: Anticipating new federal regulation and enforcement actions
  • United States Supreme Court:

Drones, a generic term for unmanned aircraft, have been utilized in military applications for decades. More recently, however, advances in drone technology and construction have made the devices more accessible. These advances and increased accessibility have allowed more commercial and industrial applications to take off. For example, certain retailers are considering ways to efficiently use

As we mentioned in a previous post, the COVID-19 pandemic has generated a wave of bankruptcies that we expect to continue into 2021. Companies entering 2020 in a strong financial position may now need to quickly shed distressed assets and generate cash. A Chapter 11 reorganization is likely to be too long and burdensome for companies in this position. Fortunately, the Section 363 sale process offers a speedier alternative for disposing of distressed assets and allows purchasers to acquire those assets free and clear of liens and encumbrances, ostensibly including environmental liabilities. But caveat emptor: not all environmental liabilities are extinguished. Stalking horse candidates (and other buyers of assets from a 363 sale) should consult experienced environmental transactional counsel to understand exactly what environmental liabilities remain and how to structure the purchase agreement and sale itself to maximize release from preexisting environmental liabilities.

The Section 363 Sale Process and Benefits

Section 363 of the Bankruptcy Code provides for the sale of assets through a competitive bidding process outside of a Chapter 11 reorganization. The process typically begins with a debtor marketing assets to potential purchasers. Due diligence occurs, and the potential purchasers submit bids for the assets. The debtor selects the best bid, and that party becomes the “stalking horse.” The debtor and stalking horse bidder then negotiate an asset purchase agreement. After the asset purchase agreement is negotiated, the debtor files a motion to approve bidding procedures with the bankruptcy court. Potential purchasers then submit their bids according to the court-approved procedures, and the debtor selects the winning (i.e. highest) bid. Once the debtor selects the winning bid, the court must approve the sale of the assets before they are transferred to the successful bidder.

Despite the competitive bidding process, Section 363 sales provide notable benefits to both debtors and prospective purchasers. First, the process is speedy. Debtors in need of quick cash can sell off distressed or illiquid assets through the Section 363 process without the approvals and voting needed for Chapter 11 reorganizations. Purchasers also like the process because they can often obtain assets at a discounted price. More importantly, however, Section 363 sales provide for the disposition of assets free and clear of liens and encumbrances. This benefits both debtors and prospective purchasers. Debtors may claim that the assets are being sold as is and therefore provide limited representations and warranties. At the same time, purchasers obtain the assets free and clear of liens and encumbrances and therefore acquire generally clean title supported by a bankruptcy order.

Continue Reading Quick cash in the times of COVID-19 – Section 363 sales of distressed assets and environmental liability