Tag: Biotech & Cleantech

Six Biofuel Trade Associations Write Congress To Extend Advanced Biofuel Tax Credits

On April 5, 2016, the biofuel trade associations Advanced Biofuels Business Council, Algae Biomass Organization, Biotechnology Innovation Organization (BIO), Growth Energy, National Biodiesel Board, and Renewable Fuels Association sent a letter to House and Senate Leaders asking for a multiyear extension of advanced biofuel tax credits. The six organizations are specifically asking that the Second Generation Biofuel Producer Tax Credit, the Special Depreciation Allowance for Second Generation Biofuel Plant Property, the Biodiesel and Renewable Diesel Fuels Credit, the Alternative Fuel and Alternative Fuel Mixture Excise Tax Credit, and the Alternative Fuel Vehicle Refueling Property through the Protecting Americans From Tax Hikes Act of 2015 are extended before they expire at the end of 2016. Other energy production tax credits have been extended, and the biofuel trade associations argue that extending certain energy tax provisions and not others creates investment uncertainty across the energy sector, and puts biofuel producers at a disadvantage.

Article By Kathleen M. Roberts of Bergeson & Campbell, P.C.

©2016 Bergeson & Campbell, P.C.

Cloning Decision Could Lead to Copycat Litigation in the World of Racing

Sheppard Mullin 2012

Owners of elite American Quarter Horses may soon be ponying up to create clones of their champions.

On July 31, 2013 a North Texas District Court jury decided that the American Quarter Horse Association’s (“AQHA”) rule prohibiting the registration of cloned American Quarter Horses violates federal and Texas antitrust laws. The AQHA, located in Amarillo, Texas, is the world’s largest equine breed registry and membership organization, with more than 5 million American Quarter Horses registered to nearly 350,000 members.

The American Quarter Horse excels at sprinting short distances and racing of these animals is the third most popular form of horse racing, generating more than $300 million in bets at U.S. racetracks in 2012. American Quarter Horses are bred to run in races of under a quarter-mile and have been clocked at speeds up to 55 mph.

Plaintiffs Jason Abraham and Gregg Veneklasen sued the AQHA for $6 million in damages, arguing that Rule 227(a) of the AQHA, which prohibits the registration of clones, violated both the Sherman Antitrust Act and the Texas Free Enterprise Act, which reflects federal antitrust law.

Plaintiffs alleged that the association’s prohibition of clones violates Section 1 of the Sherman Antitrust Act because the AQHA acted as a conspiracy that unreasonably restrained interstate or foreign trade. In response, the AQHA argued that the association is a single body and that the Board of Directors acted with a single interest, and therefore cannot be a conspiracy. Plaintiffs further alleged that the rule violated Section 2 of the Sherman Antitrust Act because the AQHA acted to maintain its monopoly power in the industry by enacting the rule. In response, the AQHA argued that the rule did not maintain monopoly power, but instead narrowed the association’s reach by reducing the potential universe of its registered horses.

On July 31, the jury found that the AQHA’s Rule 227(a) violated Section 1 and Section 2 of the Sherman Antitrust Act, as well as the equivalent Texas laws. In their decision, the jury awarded no damages, but could lead to the reversal of Rule 227(a) following an order the District Court Judge.

Johne Dobbs, the President of the AQHA’s Executive Committee, is reported as saying that the AQHA will appeal the North Texas District Court decision to the 5th Circuit, though it may be a year before a decision is made on the appeal.

A decision in favor of the AQHA by the 5th Circuit could have a reversing effect on a number of changes to AQHA rules since 2000, while a decision against could further cement the trend toward the AQHA being more inclusive. In 2000, a breeder sued the AQHA regarding the association’s rule that limited one registeredhorse per breeding pair per year, which thereby prohibited the use of embryo transplants to create multiple foals per breeding pair. The court held in an interlocutory order that the rule was an anticompetitive restraint of trade, adopted for the purposes of limiting the supply of registered quarter horses. Before a final order was written, the two parties settled and the AQHA changed its rules to allow for the registration of all embryo transfer foals. Since then, the AQHA has changed its rules to also register horses considered perlinos and cremellos to register, as well as horses deemed to be excessively white. The AQHA may be interested in pursuing a reversal to these changes if the 5th Circuit rules in their favor.

A decision against the AQHA could also lead to other breeder associations, including the American Kennel Club and American Paint Horse Association, to change their rules prohibiting the registration of clones.

An industry able to support quarter horse clones is likely ready to go if the courts side with the plaintiffs. Texas company ViaGen owns the patent that created the infamous cloned sheep, Dolly. The company has already cloned a number of horses, including Royal Blue Boon, the all-time leading dam of cutting horses with personal lifetime earnings of $381,764 and produce earnings of over $2.6 million. Hundreds of American Quarter Horse owners have already gene banked their horses in anticipation of the AQHA changing Rule 227(a).

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Who’s GINA and What Should I Know About Her? Re: Genetic Information Nondiscrimination Act

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GINA is not a who, but rather a what. The Genetic Information Nondiscrimination Act (“GINA”) was passed by Congress in 2008. GINA makes it illegal for employers with 15 or more employees to discriminate against employees or applicants on the basis of genetic information. Employers cannot lawfully inquire about (1) an individual’s genetic tests; (2) the genetic tests of an individual’s family members; or, (3) the manifestation of a disease or disorder in the family members of such an individual.

At the end of 2012, the Equal Employment Opportunity Commission (“EEOC”) announced in its Strategic Enforcement Plan that genetic discrimination would be a top priority over the next four years. The EEOC stuck to their word – in May, 2013, the EEOC settled its first lawsuit alleging GINA violations. The suit involved a fabrics distributor, Fabricut, Inc., who allegedly violated the Act by asking a woman for her family medical history in a post-offer medical examination. The company refused to hire the applicant after assessing that she had carpal tunnel syndrome, which led to Americans with Disabilities Act violations as well. The suit was settled for $50,000.

Shortly thereafter, the EEOC filed its second suit against The Founders Pavilion, Inc., a nursing and rehabilitation center. According to the EEOC suit, Founders conducted post-offer medical exams of applicants, which were repeated annually if the person was hired. As part of this exam, Founders requested family medical history, which is a form of information prohibited by GINA.

Employers should ensure that their policies related to employee medical information and any conducted medical exams comply with GINA. In addition, it would be wise for employers to update employee handbooks to state that discrimination on the basis of genetic information is prohibited.

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Brain Spray and the Law

Womble Carlyle

Now that we can capture and use the signals emitted by human brains, we should consider whether brain signals are public property. If your face and voice become available to the public through use, is the same true for your thoughts, when they can be read by others?

Several recent news items have illustrated the progress humans have made in understanding the brain’s workings and harnessing an active brain for practical purposes. For example, this week, Duke University researcher Miguel Nicolelis used microchips and the internet to connect the brains of two mice on different continents, so that the thoughts of one can influence the actions of the other. Much of Dr Nicolelis’s work involves creating an exoskeleton that a paralysed person could operate with brain signals.

Similarly, University of Pittsburgh researcher Andrew Schwartz has been working since 2006 to find ways for a person to control a robotic arm with only brain signals. In February 2013, surgeons implanted four microchips in a paralysed patient’s brain that translate her brain’s signals into movement in robotic equipment. 60 Minutes and ABC News showed a video of the Pittsburgh patient feeding herself ice cream through brain signals to a robotic arm.

Such scientific work involving directed brain signals seems like science fiction, but the technology is available right now, and will only improve over time, and soon will be available commercially. Right now, the most rudimentary brain-driven technology can be purchased. High-end toy emporium Hammecher Schlemmer sells a “Telekinetic Obstacle Course” that use focused brain waves to manoeuvre a ball through an obstacle course. The game comes with a headband to read your brain signals and then wirelessly transmit those signals to the game’s air fan, which increases or decreases speed depending on your signal, blowing a foam ball around an obstacle course.

For example, Australian scientist and entrepreneur Tan Le, the founder of Emotiv Lifescience, has created a headset that serves as an interface for reading the wearer’s brainwaves, making it possible to control virtual and physical objects with directed thoughts. Eventually the headset will be conditioned for diagnostic use, but current products using the brain-interface headset for videogames, allowing users to drive virtual race cars with their concentrated thoughts.

Modern science has identified two types of “brain spray”, or signals that can be harnessed from outside of a person’s skull. The first is the directed thoughts described in the examples above, where certain voluntary brain signals, created by the subject concentrating on a goal or action, are read and translated by either a device worn by the subject or by microchips placed in the subject’s head. Research into this field, including US government funded research by DARPA, may lead to practical solutions allowing wounded veterans or other people with disabilities to grasp, drive, walk and talk again.

This type of brain spray will lead to legal concerns. For example, if a wounded soldier is offered a limb that responds to his thoughts, the company providing the limb will want to capture information from the electronics that capture brain signals, both for understanding and improving the equipment and for monitoring its use. Could a disabled person say “no” to the company who was offering a newly functional life, or would he be forced to sign away his brain spray for benefit of science and a company providing the equipment.

We all know that our signals from laptops and smartphones are captured by any number of companies – telephone signal providers, hardware manufacturers, app developers, banks and payment businesses – when we undertake actions or transactions over the internet. There is no reason that the same rules would not apply to our directed thoughts when our computing devices are controlled by focused brain signals. Google is already testing computing in the form of eyeglasses that could easily be equipped to read such brain spray and turn it into both action and data. Our thoughts would be available to our service providers.

The other brain spray that can be captured and turned to practical use is translation of brain activation signals currently read by functional magnetic resonance imagining machines (fMRI). These signals are more intrusive than the focused brain signals described above, because the fMRI provides pictures of what part of a human brain is activated by situations or stimuli. The fMRI pictures can easily be interpreted as triggers for various emotions. Because certain emotions trigger activity in specific parts of the brain, fMRI brain spray comes close to showing what the subject is feeling about the situation he is in.

Scientists currently read and interpret the emotional and logical meanings of fMRI signals from the human brain. In a 2008 article for Atlantic Monthly, Jeffrey Goldberg submitted himself to brain readings where scientists used MRI scanning to observe which areas of Goldberg’s brain reacted to certain images. The scientist showed Goldberg pictures of personal, political and cultural figures, recording his brain’s involuntary reactions with the MRI machine and noting when his brain activated in areas indicating affection and affinity for certain pictures (Goldberg’s wife and Bruce Springsteen) and revulsion at other pictures (Osama bin Laden).

This technology is attractive to corporations wanting to know how to stimulate your urge to buy their products and to see how you react to their advertising. However, do you want companies to know this much about you? Current law holds that if you have no reasonable expectation of privacy, then you cannot stop anyone from harvesting information from you. For example, when you are out on the public roads or when you walk up to an Automated Teller Machine at the bank, you are subjecting your appearance, your facial expressions and even your body itself, to scrutiny, photography, recordation and information capture by other people (or the bank) who share your public space.

If your appearance, your voice, and even your DNA is available to everyone in public (many US courts allow police to collect a suspect’s DNA in public places without a warrant), then why would this rule not extend to your brain spray when you enter the public area at a time that mobile fMRI technology or other brain signal capture technology is commercially available? Exposing your brain signals in public may be no different from exposing your face or your voice at the same time. Why would you have a reasonable expectation of privacy in your brain spray when you know it can be read by anyone with the right equipment? Many will argue that once your body is in a public space, then it can be read by the government or business in any way that they are able.

If there were limits to the use of this technology to read your exposed brain signals, situational rules would have to be developed. For example, when fMRI technology is cost-effective and practical to use from a distance, should you automatically submit to brain scanning just by walking into a certain store, casino, bank or government building? Will companies provide notice before scanning you? Will the scan data be linked to your credit card purchases to identify you, linked to the uniform identifier in your smartphone, or linked to RFID tags in the products you buy?

This technology also has national security applications for interpreting malice in sensitive situations. The government may be able to read a suspect’s brain activity to identify intent to act before the crime takes place, scanning banks and airports for signs of potentially criminal intent. But our criminal law is based on punishment for actions, not thoughts or intentions. Everyone has intemperate thoughts of anger, frustration and fantasies of outrageous exploits, but people manage to keep those ideas in their heads and not act on them. How much do you want the government to know about your unfiltered thoughts, once those thoughts can be read from outside your head?

Once the technology is widely available, anyone could use its invasive and interpretive powers. Employers may examine their workers for hostile thoughts toward management or sympathetic thoughts toward labour organisers. Colleges can probe their applicants’ level of enthusiasm for learning. The military could test for signs of homosexuality in recruits without asking or telling. Lawyers and investigators in divorce cases would have a new avenue to examine unfaithful behaviour. How quickly would enthusiastic opposition dig up the thought crimes of political candidates?

Our laws are inadequate for addressing these issues or protecting the privacy of our brain spray. Current privacy law in the United States would not prohibit harvesting brain spray and would not even require an individual’s permission to do so. The current American privacy laws relating to reading your biometric measurements and physical condition only apply to body signs taken for health care purposes.

If a hospital records your blood type or your DNA to test for disease, those records are private and you have the right to keep them from being used for other purposes. However, a reading of your body, including your DNA and your brain spray, is not protected from transmission or sale between companies if the reading was taken for security, marketing or intelligence purposes. The recorded thoughts showing your excitement at the perfect little black dress or those used to power your prosthetic arm may be transferred to anyone. The law leaves you vulnerable.

Brain spray is the ultimate prize in the larger security and privacy debate concerning what personal facts may be captured by commercial or governmental interests. Why bother asking you what you think about a politician or a product when a company can read it directly from your brain? Without legal change, finding out who really loves “mom”, apple pie and America could soon be as simple as a head examination.

Originally published March 22, 2013 in the International edition of Intellectual Property Magazine Online

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No Implied Duty to Develop Particular Strata in Pennsylvania (e.g. Marcellus Shale)

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On June 21, 2013, the Superior Court of Pennsylvania (the “Court”) held that a lessee does not owe a duty to a lessor to develop each and every “economically exploitable strata” under an oil as gas lease in Pennsylvania.

In early 2012, Terry L. Caldwell and Carol A. Caldwell, husband and wife (“Plaintiffs”) sued Kriebel Resources Co., Range Resources—Appalachia, LLC and others (“Defendants”) regarding an oil and gas lease executed between the Plaintiffs and Defendants on January 19, 2001 (the “Lease”). The Lease provided for a primary term of twenty four (24) months and so long thereafter as oil or gas was being produced. The Defendants drilled a number of shallow wells on the property that Defendants alleged held the entire property under the terms of the Lease. Plaintiffs brought suit against the Defendants in early 2012 alleging that, among other things, Defendants breached the implied duty to develop the property by not drilling deeper wells to exploit the valuable Marcellus Shale and, based on such potential unexploited value, the current production did not amount to production in paying quantities. The trial court sustained certain preliminary objections raised by the Defendants that resulted in a dismissal of Plaintiffs’ claims. In Terry L. Caldwell et al. v. Kriebel Resources Co. et al. (1305 WDA 2012), the Court affirmed the trial court’s dismissal of the case.

Regarding the duty to develop, Plaintiffs argued that without direct Pennsylvania case law on topic the Court should follow a Louisiana case, Goodrich v. Exxon Co., 608 So.2d 1019 (La. App. 1992), which held that Exxon’s duty to develop as a reasonably prudent operator included the obligation to develop valuable oil-producing sands underlying the leased premises. Based on this rationale, Plaintiffs alleged there is an implied duty to “develop all strata, not simply to extract shallow gas . . .” The Court rejected the application of the Goodrich rationale and held that the specific terms of the Lease were to control. Therefore, because the Lease provides for the continued validity of the Lease upon production of gas and allows for the guarantee of delay rentals if no gas is produced, the Court found that it was “not compelled to follow Louisiana law.” The production from various shallow wells was found to be sufficient to hold the entirety of the leased estate.

The Court also rejected Plaintiffs’ claim that the concept of “paying quantities” should be based on all potential gas strata underlying the Lease and should impose some obligation relating to good faith. The Court quickly dismissed this claim and made clear that “paying quantities” in Pennsylvania merely requires the well to “consistently pay[] a profit, however small.” It is of no legal effect that the extent of the profit produced from these shallow wells is “not to the extent appellants desire.” Due to the continued production in paying quantities and the Court’s failure to impose a duty on Defendants to develop all potentially economic strata, the Court chose not to terminate Defendants’ Lease.

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Supreme Court – Being Unanimous Appears to be Part of the Justices’ DNA

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On June 13, 2013, the U.S. Supreme Court unanimously decided in Association for Molecular Pathology v. Myriad Genetics, Inc. that naturally occurring DNA segments are not patent eligible because they are products of nature and merely isolating such segments does not change their status for patent eligibility. However, complementary DNA (cDNA) is patent eligible because it is not naturally occurring.

Isolated DNA sequences – patent ineligible

In the third opinion since 2010 dealing with the scope of patent eligibility,1 the Court found that Myriad’s claims directed towards isolated DNA segments fell “squarely within the law of nature exception.” Slip op. at 13.  Myriad discovered an “important and useful gene, but separating that gene from its surrounding genetic material is not an act of invention.” Slip op. at 12. The Court rejected the idea that isolation of DNA segments requires severing of chemical bonds, which creates a non-naturally occurring molecule. While Myriad may have expended a significant amount of research effort to discover the location of the genes of interest, effort alone does not render such subject matter patentable.

For landmark Supreme Court decisions regarding patent eligibility, please click here.

cDNA sequences – patent eligible

The Court noted that cDNA differs from isolated DNA segments and does not present the same obstacles for patent eligibility. Notable distinctions, according to the Court, are that cDNA’s creation results in an exons-only molecule, which is not naturally occurring. While acknowledging that the nucleotide sequence of cDNA is dictated by nature, the Court focused on the fact that creation of cDNA “unquestionably creates something new.” Slip op. at 17. cDNA is distinct from the DNA from which it was derived, and thus is not a product of nature. However, the Court noted that, in some instances, such as a very short segment of DNA having no intervening introns, the cDNA may be indistinguishable from the DNA. In such a situation, that cDNA is not patent eligible.

What the Court did not decide

The Court was careful to note that its decision did not implicate method claims, patents on new applications based on discoveries related to specific genes, or patentability of DNA in which the order of naturally occurring nucleotides has changed. Thus, the eligibility of methods of manipulating DNA, applications of knowledge learned from DNA segments, and manipulations of DNA sequences are questions still on the table.

Standing

An additional interesting aside is the Court’s approach to the declaratory judgment standing issue. The Court, in footnote 3, simply indicates that under all of the circumstances presented, the MedImmune standard had been met. Whether this opens the door to additional declaratory judgment actions in the future is uncertain.

Impact

This decision will likely not have a devastating impact on the patent portfolio of genetic diagnostic companies. These companies typically focus more on patents directed towards multi-gene products, methods, and cDNAs than on claims directed to isolated DNA sequences to protect their genetic tests. Nevertheless, should a company seek to assert a patent with claims directed to isolated DNA sequences, such an assertion will now be subjected to summary judgment motions based on the patent ineligibility of such claims.

In the long term, however, today’s decision will likely have a big impact on businesses engaged in developing chemical and biological therapeutics, with patents directed to isolated naturally occurring compounds. The Court has held that merely separating a segment of DNA from its natural surrounding is “not an act of invention.” How such analysis could be applied in the chemical and pharmaceutical arts remains to be seen. The Court’s opinion likely will be used to attack chemical and pharmaceutical patents directed towards naturally occurring compounds like proteins, antibodies, and other naturally occurring biomolecules. Whether such patents fall within chemical compositions or focus on the chemical changes, which result from isolation that the Court has suggested may be patentable, will likely be determined on a case by case basis.

Lastly, in an era of ever polarizing politics, it is fascinating to see that this decision, like most other recent U.S. Supreme Court decisions involving patents,2 is a 9-0 decision.  All of the current justices unanimously agree on what is the appropriate scope of patent eligibility.

1 Bilski v. Kappos, 130 S. Ct. 3218 (2010) and Mayo Collaborative Services v. Prometheus Lab., Inc., 132 S. Ct. 1289 (2012) are two unanimous U.S. Supreme Court decisions dealing with the patent eligibility of method claims.

2 See Bilski v. Kappos, 130 S. Ct. 3218(2010); Mayo v. Prometheus, 132 S. Ct. 1289(2012); Caraco Pharm. Lab., Ltd. v. Novo Nordisk A/S, 132 S. Ct. 1670 (2012); Kappos v. Hyatt, 132 S. Ct. 1690 (2012); Bowman v. Monsanto Co., No. 11-796 (2013).

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Weighing Going Private or Sale to Carl Icahn, Dell Cuts off Info

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As Dell Inc. considers its future after a massive loss in value over the past decade, the question may fundamentally be this: are the company’s problems are the result of poor leadership or a relatively straightforward matter of shedding its stock obligations?

Two proposals are on the table. First, founder Michael Dell has proposed taking the company private by buying out the company’s stock for $24.4 billion through a private equity firm called Silver Lake. Second, business magnate Carl Icahn’s Southeastern Asset Management has offered to buy Dell for $12 in cash per share. Unfortunately, it’s not clear how the buyout negotiations are going.

An unquestioned leader in the personal computer industry in the 90s, Dell had lost some $68 billion in stock market value by 2010, reportedly due to a change in its customer base and inability to respond to Apple’s iPhone and iPad products. Sales at Dell continue to shrink, reportedly showing a 79 percent drop in a quarterly profit report filed last week.

As part of the buyout negotiations, Icahn sent a letter on seeking more detailed information from Dell, including data room access for a certain potential lender This week, however, a special committee of Dell’s board of directors sent Icahn a letter refusing access to that information until it can determine whether his offer is “superior” to Michael Dell’s.

Meanwhile, Dell insisted upon more information from Icahn — such as whether his offer is even serious. In its response, the committee specifically asked Icahn to make “an actual acquisition proposal that the Board could evaluate” as opposed to merely offering the board a backup plan in case Michael Dell’s proposal fails to move forward.

“Please understand that unless we receive information that is responsive to our May 13 letter, we are not in a position to evaluate whether your proposal meets that standard,” the special committee reportedly wrote in response to Icahn’s request.

The question on Wall Street is the same as Dell’s: Is the Southeastern Asset Management offer serious? Icahn reportedly already owns 4.5 percent of Dell’s stock, while Southwest, already Dell’s largest outside shareholder, owns 8 percent.

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Bipartisan Toxic Substances Control Act (TSCA) Modernization Bill, Chemical Safety Improvement Act, Introduced in Senate

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In a major breakthrough, bipartisan and broadly supported legislation to modernize the Toxic Substances Control Act (TSCA) has been introduced in the Senate. The Chemical Safety Improvement Act (CSIA), S. 1009,[1] was announced on May 22, 2013[2] by its chief Democratic and Republican sponsors, Senator Frank Lautenberg (D-NJ) and Senator David Vitter (R-LA). This client alert provides the political context for this remarkable development, and then explains the key provisions of the bill. It concludes with comments on the prospects for passage.

Political Context

Just weeks ago, Senator Lautenberg, a longtime champion of TSCA reform, had reintroduced his own comprehensive chemical safety bill, the Safe Chemicals Act (SCA), as described in our previous report.[3] The SCA targets many of the same aspects of TSCA as the CSIA does, but applies different, often more complex approaches. The SCA has obtained support only from the Democratic caucus, with 26 Democratic and 2 Independent co-sponsors. This one-sided support left the SCA with few prospects for passage by the Republican-majority House of Representatives, even assuming that the Democratic majority in the Senate could pass it.

Now, with Senator Lautenberg’s retirement next year lending more urgency to his quest for a viable TSCA modernization bill, the long-sought goal of bipartisan support has been achieved. As of this writing, the CSIA has been co-sponsored not only by a number of Democratic senators who had co-sponsored the SCA,[4] but also by eight Republicans,[5] as well as three more conservative Democratic senators who had not signed on to the SCA.[6] Since the original introduction, three Democrats and one Republican have co-sponsored the bill,[7] for a total of 19 co-sponsors (10 Democrats and 9 Republicans).

Initial reactions to the CSIA have been generally been very favorable, by both industry groups[8] and some NGOs.[9] Other NGOs have already announced their opposition, however.[10]

EPA has not commented publicly on the bill, although two former EPA officials in the TSCA office, Steve Owens and Charlie Auer, issued statements of support.[11]

There is no guarantee of passage, but never before have the prospects for TSCA modernization been more favorable.

Key Provisions

1. Overview

The CSIA would mandate that EPA determine, on a prioritized basis, whether chemical substances meet a safety standard under the intended conditions of use. If they are found not to meet the safety standard, EPA would have to regulate them. The CSIA would establish a prioritization mechanism; set a safety standard; require EPA to determine whether chemical substances meet that safety standard under the intended conditions of use, by deadlines set by EPA; authorize EPA to require testing when additional information is needed in order to complete that determination; and direct EPA to select risk management measures by taking costs and benefits into account, but not by requiring use of the least burdensome alternative.

In addition to these core provisions, the bill would make limited changes to the new chemical provisions; require reporting by processors; lead to identification of chemical substances that are actively manufactured or processed; revise confidentiality protections, including protection for chemical identities; expand preemption of state and local restrictions of chemicals; and update export and import reporting requirements.

2. Prioritization

The prioritization mechanism would classify a chemical substance as being a high priority or a low priority for a safety assessment and safety determination. With few exceptions, only chemicals classified as active (see below) would be considered for prioritization. Only high-priority chemical substances would continue on to safety assessments and determinations.

For the most part, there would be no statutory deadlines for completing the prioritization process, but EPA would have to make every effort to complete the prioritization of all active substances in a timely manner. A state governor or agency could recommend chemical substances for prioritization; EPA would have to complete its prioritization of those substances within 180 days. If EPA were to need additional information before prioritizing a chemical substance, it could ask the public to submit existing data, but it could not require testing. Lists of high- and low-priority substances would be made public.

3. Safety Assessments and Safety Determinations

EPA would conduct a safety assessment and then a safety determination of each high-priority substance. The safety assessment would be based solely on considerations of risks to health and the environment. EPA would have to establish a methodology for conducting safety assessments and would have to rely on the best available science. The methodology would have to be reviewed every five years and updated as necessary.

Upon completing a safety assessment, EPA would make a safety determination, i.e., determine whether or not the chemical substance meets the safety standard under the intended conditions of use, taking into account factors such as the range of exposure, the weight of the evidence, and the magnitude of the risk.

EPA could require testing if necessary for it to complete either a safety assessment or a safety determination.

There would be no statutory deadlines, but EPA would have to set its own deadlines for completing each safety assessment and safety determination. Those deadlines could vary for different chemical substances. If EPA found that it could not meet a deadline, it would have to explain publicly the reasons for extending the deadline. This innovative approach would subject EPA to deadlines that are likely to be realistic (since it would set them itself), but would avoid the sue-and-settle litigation over failure to meet statutory deadlines that has proven problematic under some other environmental statutes.

Proposed safety assessments and safety determinations would be available for public comment. Final versions would also be made public. Safety determinations would be subject to judicial review.

4. Safety Standard

The safety standard used for safety determinations would be a standard that ensures that no unreasonable risk of harm to human health or the environment will result from exposure to the chemical substance. Compliance with the safety standard would be assessed in light of the intended conditions of use, meaning the circumstances under which a chemical substance is intended or reasonably anticipated to be manufactured, processed, distributed in commerce, used, or disposed of.

This “unreasonable risk” standard would differ from the “unreasonable risk” standard currently in TSCA. That one mandates a weighing of costs and benefits of regulation, the chemical substance, and its alternatives. The CSIA “unreasonable risk” standard would not be a weighing of competing economic and social factors, but rather a judgment after evaluation of various aspects of risk to health and the environment. Among the factors that EPA would consider would be the subpopulations that would be exposed, the degree of exposure, and the protections provided by the intended conditions of use (such as use of engineering controls, protective clothing, or warnings). For example, presumably EPA could find that a chemical substance meets the safety standard under the intended conditions of use for occupational exposure but not for exposure to children.

5. Risk Management

If EPA were to find that a chemical substance did not meet the safety standard under the intended conditions of use, it would have to adopt risk management measures through rulemaking. EPA could consider a wide variety of options, such as labeling, quantity or use restrictions, or even phase-outs or bans, if appropriate. Unlike under current TSCA, EPA would not be constrained to select the least burdensome option.

EPA would evaluate the different risk management options in terms of costs and benefits. It would have to consider whether technically and economically feasible alternatives exist; the risks of those alternatives as compared to the risks of the chemical substance under the intended conditions of use; the economic and social costs and benefits of the preferred regulatory option and other options considered; and the economic and social costs and benefits of the chemical substance and its alternatives.

6. New Chemicals and Significant New Uses of Existing Chemicals

Under the CSIA, the current approach for premanufacture notifications (PMNs), significant new use rules (SNURs), and significant new use notices (SNUNs) would continue. The bill would codify some of EPA’s current administrative practices for review of PMNs and SNUNs. The authority for the current PMN exemptions, such as those for R&D, polymers, and low volume, would remain unchanged.

In evaluating PMNs and SNUNs, EPA would determine whether or not the new chemicals and significant new uses were likely to meet the safety standard under the intended conditions of use. If so, EPA would allow the review period to end and the PMN submitter to submit a notice of commencement of commercial manufacture or import (NOC). If EPA were to determine that a new chemical substance or significant new use would not be likely to meet the safety standard, it would have to impose restrictions in a manner similar to section 5(e) consent orders under current TSCA.

If EPA were to determine that it needed more information in order to make a determination about likelihood of meeting the safety standard, it could require the submitter to develop the information through testing. However, rather than require test results to be submitted before manufacture or the significant new use could commence, EPA could allow the submitter to file an NOC, begin commercial manufacture or the significant new use, and thereby generate income to pay for the testing. If the test results later created concerns for EPA, it could prioritize the chemical substance as a high-priority substance.

7. Testing

Unlike the SCA, the CSIA would have no requirements for submission of minimum information sets in specified circumstances. Instead, under the CSIA, EPA could require testing where it found that it needed additional data in order to complete a safety assessment or a safety determination, or to make a determination of likelihood of meeting the safety standard for a new chemical substance or a significant new use. It could also require testing to meet agency needs under another federal law.

EPA would have to explain its need for testing, including an explanation of why existing information could not be extrapolated to meet the need. Testing requirements would have to be tiered. There would be provisions to encourage alternatives to animal testing.

It would generally be easier for EPA to require testing under the CSIA than under current TSCA. EPA would not have to establish that a chemical substance may pose an unreasonable risk or meets certain volume or exposure levels, and it would not have to proceed by rulemaking. Instead, it could issue an order or enter into a consent agreement to require testing.

8. Reporting and Recordkeeping

EPA currently has authority to require processors to report information, but it rarely exercises that authority. The CSIA would require EPA to adopt reporting requirements for processors, although the requirements could differ from those for manufacturers.

The CSIA would address some of issues of nomenclature used for naming chemical substances on the TSCA Inventory. For example, individual members of statutory mixtures listed on the Inventory would be declared to be on the Inventory. EPA would be directed to continue using its Class 2 and carbon chain length nomenclature.

EPA would have to identify those chemical substances on the Inventory that are active, i.e., have been manufactured or processed within the past five years. It would do so by establishing a candidate list of proposed active substances, then requiring manufacturers and processors to report either the candidate list substances or other substances on the Inventory that they have manufactured or processed in the past five years. For chemical substances on the confidential Inventory, manufacturers and processors would have to reaffirm (but not resubstantiate) that the identities continue to be confidential. If no one were to reaffirm that a chemical substance on the confidential Inventory was still confidential, EPA could make that identity public. EPA would publish the list of active substances (or generic names of confidential active substances). With few exceptions, EPA would prioritize only active substances.

9. Confidential Business Information (CBI)

CBI would be protected from disclosure if certain requirements were met. Like the SCA, the CSIA would identify categories of information likely to be eligible for CBI protection or likely not to be eligible for CBI protection. New CBI claims would have to be substantiated. In most cases, previous CBI claims would not need to be resubstantiated.

Chemical identities could be protected as CBI, even if present in health and safety studies. Additional substantiation would be required, and a structurally-descriptive generic name would have to be made public. Chemical identities could be disclosed under prescribed circumstances, such as in a medical emergency.

Instead of setting fixed time periods for CBI protection, as under the SCA, the CSIA would allow CBI to be protected for the time period requested by the submitter, except where the submitter either withdrew the CBI claim or EPA otherwise learned that the claim could no longer be substantiated. In most cases, before releasing CBI publicly, EPA would have to notify the submitter and afford an opportunity to seek a court order barring release.

10. Preemption

Whereas the SCA would have allowed for virtually no preemption of state or local requirements, the CSIA would expand the preemptive effect of EPA actions as compared with current TSCA.

EPA testing requirements would continue to preempt new or existing state or local testing requirements. With limited exceptions, EPA rules, orders, and consent agreements under sections 5 or 6 for a chemical substance would preempt new or existing state or local restrictions or bans on the manufacture, processing, distribution in commerce, or use of that substance, as would a completed safety determination for the substance.

New state or local restrictions on the manufacture, processing, distribution in commerce, or use of a chemical substance would be preempted by EPA’s classification of a chemical substance as a high-priority substance or a low-priority substance.

State and local provisions relating to disposal of chemical substances, such as environmental monitoring requirements, generally would not be preempted.

A state or locality could seek a waiver of preemption if it could meet prescribed criteria. Waiver applications would be subject to notice and opportunity for comment, and waivers could be appealed to the D.C. Circuit.

11. Exports and Imports

Export notifications would only be required for chemical substances that EPA found under section 5 not to be likely to meet the safety standard under the intended conditions of use, or that a safety determination had found not to meet the safety standard under the intended conditions of use, or for which the U.S. was required by treaty to provide export notification. The latter provision refers to treaties which the U.S. has not yet ratified, such as the PIC and POPs Conventions.

Import certifications would be similar to those today, but would also require notification that an imported chemical substance was a high-priority substance or a substance for which the U.S. was required by treaty to provide export notification.

Prospects for Passage

No hearings on the CSIA have been announced, nor has a schedule for consideration been established. These are early days; some senators may still be evaluating the bill (for example, the Chair of the Environment and Public Works Committee, Senator Barbara Boxer, has not yet indicated whether she will support the bill).

Still, this bipartisan bill has fundamentally changed the prospects for passage of TSCA legislation in this Congress, which had been dim. It has effectively stopped any consideration of the SCA as a viable bill, although the SCA will serve as a touchstone for Democrats in evaluating whether to support amendments to the CSIA.

The House of Representatives remains unlikely to initiate its own TSCA legislation. However, if the Senate were to pass the CSIA with a large majority, including many Republicans, the House leadership would be likely to bring a companion bill up for consideration.

Some NGOs (e.g., the Environmental Working Group) have already announced their opposition to the bill, although others are taking a pragmatic approach of considering the CSIA as the best bill that has a realistic chance of passage.

Some Democrats are likely to seek to amend the CSIA, such as by adding statutory deadlines. Some Republicans may also want changes. Given that less than six months of the 113th Congress have passed, there is time for the Senate to consider the bill thoroughly, pass it or an amended version, and still have the House agree to what the Senate had passed. Another scenario, less likely but still possible with this breakthrough, is that both Houses would consider and pass the legislation within a short time. That is what happened with the Consumer Product Safety Improvement Act of 2008 and the Food Quality Protection Act of 1996. One thing is certain: it is important to stay tuned, because TSCA has suddenly become a hot topic on Capitol Hill.

[1] Chemical Safety Improvement Act, available atwww.bdlaw.com/assets/attachments/Chemical%20Safety%20Improvement%20Act.PDF.

[2] Senate Environment and Public Works Committee, Press Release, “Senators Lautenberg And Vitter Reach Groundbreaking Agreement To Reform Nation’s Chemical Laws; Bipartisan Legislation Would Protect Americans From Risks Posed By Exposure To Chemicals” (May 22, 2013),http://www.epw.senate.gov/public/index.cfm?FuseAction=Minority.PressReleases&ContentRecord_id=ccf8cd45-e41f-28bd-0252-9984333f7335.

[3] Beveridge & Diamond, P.C., “‘Safe Chemicals Act,’ First TSCA Reform Bill of 113th Congress, Reintroduced” (Apr. 16, 2013), http://www.bdlaw.com/news-1462.html; see also Beveridge & Diamond, P.C., “TSCA Modernization Proposals in Congress: Recent History and Prospects” (Feb. 25, 2013), http://www.bdlaw.com/news-1447.html.

[4] Senator Lautenberg is listed as the sponsor. Democratic co-sponsors include Senators Kirsten Gillibrand (D-NY), Richard Durbin (D-IL), Charles Schumer (D-NY), Tom Udall (D-NM), Robert Menendez (D-NJ), Tom Harkin (D-IA), and Patty Murray (D-WA).

[5] Senator Vitter is listed as a co-sponsor. Other Republican co-sponsors include Senators Mike Crapo (R-ID), Lamar Alexander (R-TN), James Inhofe (R-OK), Susan Collins (R-ME), Marco Rubio (R-FL), John Boozman (R-AR), John Hoeven (R-ND), and Lisa Murkowski (R-AK).

[6] Senators Mary Landrieu (D-LA), Joe Manchin (D-WV), and Mark Begich (D-AK).

[7] Democratic Senators Begich, Harkin, and Murray, and Republican Senator Murkowski.

[8] E.g., American Chemistry Council, Press Release, “ACC Commends Senators Lautenberg and Vitter for Bipartisan Leadership to Reform TSCA” (May 22, 2013),http://www.americanchemistry.com/Media/PressReleasesTranscripts/ACC-news-releases/ACC-Commends-Senators-Lautenberg-and-Vitter-for-Bipartisan-Leadership-to-Reform-TSCA.html/;American Cleaning Institute, Press Release, “Introduction of the Chemical Safety Improvement Act” (May 22, 2013), http://www.reuters.com/article/2013/05/22/aci-safety-act-reax-idUSnPNDC19227+1e0+PRN20130522.

[9] Environmental Defense Fund, Press Release, “A bipartisan path forward to reform U.S. chemical safety law; Hard-fought compromise legislation would better protect American families” (May 22, 2013), http://www.edf.org/news/bipartisan-path-forward-reform-us-chemical-safety-law. For a variety of NGO viewpoints, see Safer Chemicals Healthy Families blog, “Reactions to the bi-partisan Chemical Safety Improvement Act” (May 23, 2013), http://www.microsofttranslator.com/BV.aspx?ref=IE8Activity&a=http%3A%2F%2Fblog.saferchemicals.org%2F2013%2F05%2Finitial-reactions-to-the-bipartisan-chemical-improvement-safety-act.html.

[10] E.g., Environmental Working Group press release, “EWG President Ken Cook Weighs In On Senate Chemical Policy Reform Bill” (May 23, 2013), http://www.ewg.org/release/ewg-president-ken-cook-weighs-senate-chemical-policy-reform-bill.

[11] Senate Environment and Public Works Committee, “Top EPA Toxics Officials Under Obama & Bush Admins Hail Lautenberg-Vitter Bill to Reform Nation’s Chemical Laws” (May 23, 2013),http://www.epw.senate.gov/public/index.cfm?FuseAction=Minority.PressReleases&ContentRecord_id=d2553c0f-beb5-e270-2971-ff2b84a06e88&Region_id=&Issue_id=.

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Is Environmental Protection Agency (EPA) Setting Its Sights on Hydraulic Fracturing Compounds?

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Agency implements rule requiring companies to disclose information regarding the use of certain industrial chemical substances commonly used in natural gas and oil well drilling.

On May 9, the U.S. Environmental Protection Agency (EPA) issued a Direct Final Rule[1] identifying 15 chemical substances[2] that will require notice prior to manufacturing, importing, or processing for an activity designated as a significant new use. These chemicals were flagged pursuant to the Toxic Substances Control Act (TSCA) significant new use rules (SNURs). The notices, referred to as Significant New Use Notices (SNUNs), must be submitted to EPA 90 days before a listed chemical is manufactured, imported, or processed for an activity designated as a significant new use. EPA states that this will provide the agency with an opportunity to evaluate the intended use and determine whether it is necessary under TSCA to prohibit or limit the activity before it occurs.

While chemicals in the rule include those that can be employed in a broad range of uses, of particular interest is the listing of one compound[3] used in natural gas and oil well drilling and hydraulic fracturing to eliminate bacteria in the water that produce corrosive by-products. EPA included this compound due to its potential toxicity to aquatic life at concentrations above 11 parts per billion (ppb). Pursuant to the Direct Final Rule, 40 C.F.R. Part 721, Subpart E [Significant New Uses for Specific Chemical Substances] is expected to be amended to include section 721.10666, which would require reporting and associated recordkeeping obligations for the following significant new uses of this compound:

  • Industrial, commercial, and consumer activities other than as described in the original premanufacture notice (PMN) for this substance (PMN P-12-437)
  • Release to water resulting in surface water concentrations exceeding 11 ppb

EPA also recommended additional testing to help characterize the fate and environmental effects of the substance.

This is in line with EPA’s declared intent to use TSCA to require companies to disclose information regarding chemical substances and mixtures used in hydraulic fracturing. However, it has been nearly two years since the agency, partly in response to a petition filed by Earthjustice, stated that it would propose rules to require certain reporting requirements for chemicals used in hydraulic fracturing.

Under TSCA, SNUNs must contain the following:

  • Common or trade name of the chemical substance
  • The chemical identity and molecular structure of the chemical substance
  • The categories or proposed categories of use
  • The total amount of each chemical substance manufactured or processed per category or use
  • A description of by-products resulting from the manufacture, processing, use, or disposal of each such chemical substance or mixture
  • All existing data concerning the environmental and health effects of the substance
  • Estimates of the number of people exposed in their places of employment and the duration of such exposure
  • Changes in disposal methods
  • Any test data in the possession or control of the person giving the notice that is prescribed by EPA

Accordingly, while this rule does not implement a broad reporting requirement for hydraulic fracturing chemicals, it points to the likelihood of increased reporting for these substances. What is unclear, for the moment, is whether this new rule is a stopgap measure or a preview to a comprehensive proposal for TSCA reporting requirements for hydraulic fracturing chemicals.

The rule is effective on July 8, 2013, unless written “adverse or critical” comments on any of the SNURs, including potential alternatives and likely financial burdens, are received on or before June 10, 2013. Those chemical substance(s) and new use that receive comments or notice of intent to comment will be withdrawn before the effective date and a proposed SNUR for the specific chemical substance will be issued with a 30-day comment period. For purposes of judicial review, the rule is promulgated on May 23, 2013.

The rule highlights the need for firms using TSCA-listed chemicals for new and innovative technologies to bear in mind the PMN and SNUR implications for their applications. Additionally, the hydraulic fracturing industry should carefully watch for potential regulation of additional substances used in fracturing fluids.

[1]. View the Direct Final Rule here.

[2]. The chemical substances and associated PMNs subject to this Direct Final Rule are as follows:

  • Methylenebis[isocyanatobenzene], polymer with alkanedoic acid, alkylene glycols, alkoxylated alkanepolyol, and substituted trialkoxysilane (generic). PMN No. P-11-60.
  • Acetaldehyde, substituted-, reaction products with 2- butyne-1, 4-diol (generic). PMN No. P-11-204.
  • Functionalized multi-walled carbon nanotubes (generic). PMN No. P-12-44.
  • Alkenedioic acid dialkyl ester, reaction products with alkenoic acid alkyl esters and diamine (generic). PMN Nos. P-12-408, P-12-409, P-12-410, P-12-411, P-12-412, and P-12-413.
  • 2-Propenoic acid, (2- ethyl-2-methyl-1,3-dioxolan-4-yl)methyl ester. PMN No. P-12-414.
  • Quaternary ammonium compounds, bis(fattyalkyl) dimethyl, salts with tannins (generic). PMN No. P-12-437.
  • Slimes and sludges, aluminum and iron casting, wastewater treatment, and solid waste. PMN No. P-12-560.
  • Trisodium diethylene triaminepolycarboxylate (generic). PMN No. P-13-18
  • Tertiary amine alkyl ether (generic). PMN No. P-13-78.
  • Bromine, manufacture of, by-products from, distillation residues. PMN No. P-13-108.

A generic name was provided if the specific chemical substance named was claimed as confidential business information.

[3]. The “quaternary ammonium compounds, bis(fattyalkyl)dimethyl, salts with tannins (generic).”

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Vapor Intrusion Regulation and Environmental Remediation

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EPA recently issued two draft guidance documents on vapor intrusion and will accept comments on them through May 24, 2013. If finalized in current form, these guidance documents would formalize and enhance EPA’s existing practice of prioritizing vapor intrusion as a central issue in environmental remediation and could result in increases in the expense and effort required from responsible parties to achieve compliance for cleanup of contaminated sites conducted under federal authorities such as CERCLA or RCRA. They could also be highly influential in clean-ups overseen by state regulators.

Lastly, while intended for use in the regulatory context, recommendations in these guidance documents may be used to establish a standard of care in litigation involving vapor intrusion (e.g., RCRA citizen suits or common law toxic tort litigation).

Vapor intrusion is the migration of hazardous vapor from contaminated soil or groundwater into an overlying building.  It is considered potentially harmful to human health, creates risks in real estate transactions and financing due to potentially diminished property values and environmental liability, increases exposure in toxic tort litigation, and, in the federal regulatory context, is considered a pathway of possible exposure that must be evaluated as part of the evaluation and selection of a site remediation plan.

The first of these two guidance documents was prepared by EPA’s Office of Solid Waste and Emergency Response (OSWER) and is a comprehensive set of technical and policy recommendations regarding indoor air contamination arising from subsurface-source vapor intrusion attributable to all classes of volatile, or vapor-forming, chemicals (VI Guidance).[1]  The VI Guidance modifies and expands draft guidance on vapor intrusion issued by the agency in 2002 (2002 Draft VI Guidance), which provided general direction for evaluating the potential for vapor intrusion pathways at cleanup sites but omitted any measures for delineation and mitigation of potential risks.[2]  In a 2009 report, EPA’s Office of the Inspector General (OIG) recommended that EPA update the 2002 Draft VI Guidance to reflect the numerous technical and policy advancements made since that time in both the public and private sectors.

The second guidance document was prepared by EPA’s Office of Underground Storage Tanks (OUST) and is focused on investigations and assessments at petroleum contaminated sites where vapor intrusion by petroleum hydrocarbons may occur (Petroleum VI Guidance).[3]

VI Guidance

The VI Guidance presents a step-by-step vapor intrusion assessment plan, beginning with gathering and evaluating data for an initial conceptual site model, through collecting and evaluating additional data from various sources, and culminating in a risk assessment.  According to EPA, the VI Guidance addresses the recommendations made in the OIG’s 2009 report and takes into consideration more recent guidance developed by states and other technical working groups.  Some of the elements in this document may well trigger an increase in expense in addressing VI risks and lengthen the site evaluation process.

·        Superfund Five-Year Reviews: At Superfund sites that require five-year reviews,[4]EPA will gather data on vapor intrusion pathways and assess the sufficiency of the selected remedy for follow up in the five-year review report.  Therefore, according to the VI Guidance and related Directive 9200.2-84,[5] the five-year review process could result in the re-opening of established Superfund remedies to address vapor intrusion, “even if vapor intrusion was not addressed as part of the original remedial action.”[6]

·        Preemptive Mitigation/Early Action: EPA recommends consideration of engineered methods to reduce vapor in buildings (e.g., by installing a radon-type detection system or vapor barriers), even in the absence of all pertinent lines of evidence necessary to characterize the vapor intrusion pathway.  Any such measure would be an early effort to cut off exposure before completing investigations, but would not address the subsurface vapor source.  The agency’s rationale is that installation of engineered exposure controls in buildings is typically more cost-effective and less disruptive than conventional vapor intrusion investigations and subsurface characterization.  Once preemptive mitigation measures are installed, however, that may conclude only an initial step rather than complete remediation.  In the context of brownfields programs, treating preemptive mitigation now as only an interim solution may affect long term redevelopment plans.

·        Aggregate Noncancer Health Risk: Even when the exposure level for each contaminant at a site is below screening levels and it is assumed that each “acts independently (i.e., there are no synergistic or antagonistic toxicity interactions among the chemicals)”, the VI Guidance nevertheless proposes that a risk manager aggregate the individual noncancer health risks associated with each contaminant exposure to determine whether a response is warranted.  The aggregated risk is reflected in a “noncancer hazard quotient” that would ultimately drive the response.  This approach could be overly precautionary if the aggregated sum overstates the actual risks presented by the individual constituents.  Furthermore, the VI Guidance recommends use of multiple lines of evidence in calculating and evaluating these risks, a process that may prolong response decisions and negatively affect situations where quick resolution of VI issues is paramount (e.g., brownfield redevelopment projects).  On the other hand, evaluation of multiple lines of evidence may be more advantageous to the extent it provides for a more informed view of likely risk.

·        Background Levels: Time-integrated sampling of volatile chemicals (as opposed to short-duration, or “grab” sampling) at multiple locations in and around a site is, in EPA’s view, necessary to distinguish among potential sources of these chemicals (i.e., ambient sources, indoor sources, or vapor intrusion).  In the past, generic values of historic background concentrations have been used to characterize ambient or indoor source concentrations.  However, EPA now recommends against the use of these generic values, even those from peer-reviewed sources, and instead asserts that only site-specific data (e.g., sub-slab, indoor air, and ambient air sampling data) should be used.  This recommendation will likely lead to improved accuracy and better understanding of site conditions, while at the same time increasing the time and cost related to characterization efforts.

Petroleum VI Guidance

The 2009 OIG report expressed concern that EPA’s 2002 Draft VI Guidance did not address petroleum vapor intrusion at UST sites.  The proposed Petroleum VI Guidance seeks to address that concern for UST sites and RCRA-driven activities undertaken by private UST owners and operators.  In addition to the traditional chemicals found in petroleum products (such as benzene), the Petroleum VI Guidance would require consideration of vapor risks associated with gasoline additives (such as MTBE) and chemicals that develop from biodegradation of petroleum in soil and groundwater (such as methane).

As proposed, at least two parts of the Petroleum VI Guidance may, in comparison with past experience, result in increased response costs and delays for responsible parties.[7]  First, the Petroleum VI Guidance rejects the notion that a single sampling event is a sufficient basis to conclude that further vapor intrusion investigation is unnecessary because “periodic monitoring and sampling over more than one annual cycle is generally needed” to address fluctuations in groundwater levels and contaminant plumes over time.  Second, the Petroleum VI Guidance includes a number of recommendations that suggest EPA seeks to reduce reliance on models.  Specifically, when modeling requires the use of literature values due to the unavailability of site-specific data, EPA “recommends that an uncertainty analysis be conducted to provide error bounds on predictions of the computer model,” and that the results of any modeling exercise be verified with field data.

Considerations for Both Guidance Documents

In conclusion, both of these proposed guidance documents signal an increased focus on vapor intrusion within EPA.  As they are amended and finalized, there is a limited opportunity to comment on them to try to encourage a final guidance that is workable and effective for remediation of sites with vapor intrusion issues.  There may be ways to improve the guidance by clarifying where there is site-specific flexibility and where the guidance is overly prescriptive.

Notably, these guidance documents may help define the standard of care in the context of RCRA citizen suits or common law toxic tort litigation.  Clarifying key assumptions in the guidance may buffer some of that impact.

Even though these guidance documents are in draft form and will likely be subject to considerable comment, EPA regions and states can be expected to consult and employ them during what may be a long interval before they are finalized.  To the extent EPA or a state regulatory agency does so and an affected party disagrees with aspects of the guidance at issue, parties should be aware that the draft guidances are non-binding on their face.  The documents state that they do “not impose any requirements or obligations on the [EPA], the states, or the regulated community.”  Accordingly, parties should be free to suggest alternative, technically sound approaches to regulators.  Moreover, because these documents are solely drafts and have not been tested by external expertise that will be provided in public comment, reliance on them in their current state is arguably premature.

Given the potential long term impact on cleanup requirements, interested parties should evaluate the guidance and strongly consider submitting comments to EPA by May 24, 2013.  In light of the complex technical issues involved, interested parties may also wish to request that EPA extend the comment period.

[1] EPA OSWER, “Final Guidance for Assessing and Mitigating the Vapor Intrusion Pathway from Subsurface Sources to Indoor Air” (Apr. 11, 2013)

[2] EPA OSWER, “Draft Guidance for Evaluating the Vapor Intrusion to Indoor Air Pathway from Groundwater and Soils” (Nov. 29, 2002).  This draft document was never finalized.

[3] EPA OUST, “Guidance for Addressing Petroleum Vapor Intrusion at Leaking Underground Storage Tank Sites” (Apr. 9, 2013).

[4] Section 121 of CERCLA (42 U.S.C. § 9621) requires that remedial actions that result in any hazardous substances, pollutants, or contaminants remaining at the site be re-evaluated every five years to ensure that the remedy is and will continue to be protective of human health and the environment.

[5] “Assessing Protectiveness at Sites for Vapor Intrusion: Supplement to the ‘Comprehensive Five-Year Review Guidance’” (Nov. 14, 2012).

[6] In a related context, EPA officials have already acknowledged that later discovery of vapor intrusion at Superfund sites may trigger parties to litigate over whether site remedies provided for in consent decrees should be revisited under the reopener provisions in those decrees.  SeeInsideEPA, “EPA Official Says Vapor Intrusion May Drive Suits To Reopen Cleanup Pacts” (May 3, 2013), available at http://insideepa.com/201305032433234/EPA-Daily-News/Daily-News/epa-official-says-vapor-intrusion-may-drive-suits-to-reopen-cleanup-pacts/menu-id-95.html?s=mu. 

[7] These issues may also be relevant in scenarios involving vapor intrusion from sources other than those covered by the Petroleum VI Guidance.  However, because these points were emphasized in that guidance document, we highlight them here.

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