Final Lime Manufacturing NESHAP – U.S. EPA decides against HBEL

The final amendments to 40 CFR Part 63, Subpart AAAAA (National Emission Standards for Hazardous Air Pollutants for Lime Manufacturing [Lime Manufacturing NESHAP]) were signed on June 28, 2024 and were published in the July 16, 2024 Federal Register. With this final rulemaking, the United States Environmental Protection Agency (U.S. EPA) is setting maximum achievable control technology (MACT) emissions standards for previously unregulated hazardous air pollutants (HAP):

• hydrogen chloride (HCl);
• mercury (Hg);
• organic HAP (as the sum of formaldehyde, acetaldehyde, toluene, benzene, xylenes (mixed isomer), styrene, ethyl benzene, and naphthalene); and
• dioxin/furans (D/F).

Background

The Lime Manufacturing NESHAP regulates HAP emissions from new and existing major source plants that use a lime kiln to produce lime product from limestone or other calcareous material by calcination. Lime kilns at pulp and paper mills and a few other specific types of units are not subject to the Lime Manufacturing NESHAP.

In its 2020 residual risk and technology review (RTR) for the Lime Manufacturing NESHAP, U.S. EPA found that the current rule provided an ample margin of safety to protect public health. However, in light of the Louisiana Environmental Action Network v. EPA, 955 F.3d 1088 (D.C. Cir. 2020) (LEAN) decision, U.S. EPA proposed revisions to the Lime Manufacturing NESHAP on January 5, 2023 and included emissions standards for the unregulated HAP. U.S. EPA published a supplemental proposal on February 9, 2024 that addressed economic impact concerns expressed in public comments. See ALL4’s blog covering the February 9, 2024 supplemental proposal for more details.

Final Emissions Standards

The following table summarizes the final emissions standards for the previously unregulated HAP by lime kiln type and type of lime produced. The limits are largely consistent with those proposed in the February 9, 2024 supplemental proposal, with the exception of the organic HAP limit. U.S. EPA agreed with public commenters on adjustments to how U.S EPA calculates the 3x representative detection limit (RDL) they are finalizing as the MACT floor, which resulted in a higher emissions limit than what was originally included in the supplemental proposal.

^ADolomitic lime (DL), quick lime (QL), dead burned dolomitic lime (DB).

^BOrganic HAP is an aggregated emission limit for formaldehyde, acetaldehyde, toluene, benzene, xylenes (mixed isomer), styrene, ethyl benzene, and naphthalene as a surrogate for total organic HAP.

Notably, U.S. EPA decided not to promulgate a health-based emission limit (HBEL) for HCl. Clean Air Act (CAA) section 112(d)(4) grants U.S. EPA the flexibility to set a less stringent emission limit for a HAP based on an established health threshold with an ample margin of safety than would otherwise be required using the technology-based method of setting MACT standards. In the February 9, 2024 supplemental proposal, U.S. EPA asked for public comment on the use of an HBEL for HCl, as opposed to a MACT standard, because the 2020 RTR demonstrated very low risk to public health from HCl emissions from the source category. However, in this final rulemaking, U.S. EPA abandoned its proposed HBEL and decided to set a MACT standard for HCl, which will certainly be of interest to other industries. The February 9, 2024 supplemental proposal was one of the few times that U.S. EPA has proposed to set an HBEL, and its exclusion from the final rule sets a potential precedent as other NESHAP are revised to cover low-risk, yet previously unregulated HAP pursuant to the LEAN decision.

The final rule includes an emissions averaging compliance alterative that allows facilities to comply with the applicable HCl and Hg limits by averaging emissions across multiple existing kilns in the same subcategory located at the same facility, at the cost of having to meet alternative emission limits that are 10% more stringent. Facilities that intend to use the emissions averaging compliance alternative must develop an emissions averaging plan detailing the affected units, control technologies installed, parametric monitoring, and HAP test plan.

Timing and Impacts

Although the pre-publication version of the rule had set the effective date 60 days from Federal Register publication, the revisions became effective as of July 16, 2024. The compliance date for existing affected sources is July 16, 2027. The final rule includes first-time emissions limits for the 34 major sources subject to the Lime Manufacturing NESHAP, as well as performance testing, monitoring, recordkeeping, and reporting requirements. Facilities may need to install additional controls to meet the new MACT standards. U.S. EPA in this rulemaking estimates the average capital investment per facility will be more than $14 million and the average annual cost per facility to comply with the requirements will be approximately $5 million.

Summary

The revised rules will add a substantial compliance burden on the affected facilities and will require many to consider a permitting and compliance strategy that involves additional controls to meet the standards. It remains to be seen whether transitioning from major to area source status will be a viable option for facilities to avoid these standards because U.S. EPA is contemplating changes to the “Major MACT to Area” provisions and rethinking the prior “Once In, Always In” policy. If you have questions on the revised rules or need assistance with planning for and implementing these new requirements, ALL4 can help you develop and implement a compliance strategy, design a stack testing program, and collect and submit data and reports. Reach out to either your ALL4 Project Manager or Caleb Fetner at cfetner@all4inc.com for assistance with these new requirements.

CFATS Update

As we approach the first anniversary of the expiration of the statutory authority for the U.S. Department of Homeland Security (DHS) Chemical Facility Anti-Terrorism Standards (CFATS) program on July 28^th, there is still no concrete path to reauthorization on the horizon. Read on for recent activity related to CFATS.

Reauthorization

DHS and industry groups such as the American Chemistry Council (ACC) are continuing to push for the CFATS program’s reauthorization. There have been attempts at reauthorization, including a bipartisan amendment to the 2025 National Defense Authorization Act (NDAA) in mid-June 2024 that would have reauthorized CFATS; however, the amendment failed to reach the floor in the house. Two Senate committee chairs, Environment and Public Works Committee and Homeland Security and Governmental Affairs Committee, are currently looking at amendments to the 2025 defense bill and other ways to reauthorize CFATS. Funding was maintained in the fiscal year 2024 budget, meaning that funding is available if/when the program is reauthorized. In July, DHS hosted virtual Chemical Security Seminars in lieu of the in-person Chemical Security Summit held in years past. CFATS reauthorization continues to have strong bipartisan support in both houses.

CSAT Breach

According to DHS’s website, the Chemical Security Assessment Tool (CSAT) portal was the “target of a cybersecurity intrusion by a malicious actor from January 23-26, 2024.”  During the CFATS program’s tenure, facilities subject to CFATS were required to submit information to DHS via the CSAT portal including Top-Screen surveys, Security Vulnerability Assessments, Site Security Plans, and Personnel Surety Program (PSP) submissions. The PSP submissions included personally identifiable information (PII) for individuals with access to areas where regulated chemicals are stored at covered facilities; PII included, at a minimum, first and last name, date of birth, and gender or country of citizenship. The PSP screened individuals’ PII against the Terrorist Screening Database (TSDB) to alert DHS to individuals with known terrorism ties seeking access to chemicals of interest (COI).

The CSAT portal has been inaccessible since the program’s statutory authorization expired in July 2023. DHS launched a thorough investigation once the intrusion was discovered; that investigation turned up no evidence of exfiltration of data but revealed that the intrusion may have resulted in unauthorized access of information submitted to the portal as well as CSAT user information. In late June 2024, DHS issued notifications to participant facilities about the breach. Out of an abundance of caution, DHS has recommended the following actions:

• CSAT users should change passwords for any other business or personal accounts that use the same password as their most recent CSAT portal login; and
• Individuals whose PII was submitted through the PSP should be notified of the incident. Because the PII submitted did not include contact information, DHS is unable to contact individuals directly. DHS provided a template letter, which can be found on DHS’s website linked above, for facilities to provide to affected individuals on a voluntary basis. DHS plans to set up a call center for impacted individuals and will provide identity protection for impacted individuals, however neither are available at this time.

Where do we go from here?

As reiterated during the Chemical Security Seminars in July, the threat to chemical facilities did not expire with the CFATS program authorization. During the Seminar, Secretary Alejandro Mayorkas and others shared about recent incidents where nefarious actors attempted to or were successful in obtaining access to dangerous chemicals. Facilities previously regulated under the CFATS program are encouraged to maintain their security posture to the extent possible and continue to take advantage of other DHS resources, including the ChemLock program. At this time, there is no way for facilities to screen employees against the TSDB as previously required by Risk Based Performance Standard (RBSP) 12.4 of the CFATS program.

With the Presidential election looming on the horizon, it seems unlikely that CFATS will be reauthorized in the near future, but anything can happen. Stay tuned for more, and feel free to reach out to Lizzie Smith at lsmith@all4inc.com with any questions.

West Virginia Department of Environmental Protection to Update WV NPDES Multi-Sector General Permit No. WV0111457

The West Virginia Department of Environmental Protection (WVDEP) has proposed to update the West Virginia/National Pollutant Discharge Elimination System (WV NPDES) Multi-Sector Stormwater General Permit (MSGP) for Industrial Activities (Permit No. WV0111457) which will expire on September 12, 2024. The draft 2024 MSGP is available for review on the WVDEP MSGP Webpage; the public comment period has ended. The planned effective date for the 2024 MSGP is not yet known.

Proposed Changes to Permit No. WV0111457

Substantial changes to the existing permit include but are not limited to:

• Updating the total recoverable lead benchmark for Sector G-1
• Creating additional requirements for the stormwater pollution prevention plan (SWPPP) figure map
• Updating the reapplication timeline from 180 days to 30 days following reissuance of the general permit
• Standardizing the quarterly sampling period and reporting deadline to be the same for each permittee
• Stipulating new facilities applying for coverage under the 2024 MSGP to comply with the antidegradation requirements.

What Actions do you Need to Take?

If your facility has coverage under this permit, expect to submit a notice of intent (NOI) and an updated SWPPP via the Electronic Submission System (ESS) within 30 days of the effective date of the 2024 MSGP to ensure the facility’s stormwater coverage is uninterrupted. Facilities with a No Exposure Certification must resubmit within 30 days of the effective date of the 2024 MSGP as well.

If your facility is a new facility seeking coverage under this permit, prepare to comply with antidegradation requirements including public notice, implementing best management practices (BMPs) prior to stormwater discharge, and submitting a SWPPP and Groundwater Protection Plan with your NOI.

If you have any questions regarding the proposed updates to the 2020 MSGP or what your next steps should be to prepare for the adoption of the 2024 MSGP, please reach out to me at jfantone@all4inc.com. ALL4 will continue to track updates to the 2024 MSGP, and we are here to help with any of the above actions your facility may need to take, along with any other aspects of stormwater compliance your facility may need.

Annual U.S. Greenhouse Gas Inventory

The Annual U.S. Greenhouse Gas (GHG) Inventory is a report that provides information on the sources and sinks of greenhouse gases in the U.S. The newest version was published on April 11, 2024 and compiles the GHG data from 1990 to 2022. The report is produced by the U.S. Environmental Protection Agency (U.S. EPA) and is used to inform policy decisions related to climate change.

What are the Key Findings from the Report?

The report includes emissions of carbon dioxide (CO₂), methane (CH₄), nitrous oxide (N₂O), and fluorinated gases, with CO₂ accounting for the majority of U.S. greenhouse gas emissions. The report found that in 2022, greenhouse gas emissions in the United States were 6.34 billion metric tons of carbon dioxide equivalent (CO₂e), a slight increase from 2021 but a 3% decrease since 1990. Net CO₂e emissions have decreased by 15% from 2005 levels, which is consistent with the overall downward trend. The sectors with the largest decrease are the energy and waste sectors. Figure 1 shows the U.S. GHG emissions trends from 1990 to 2022 (U.S. EPA Document No. 430-R-24-004).

Figure 1
U.S. Greenhouse Gas Emissions and Sinks by Gas.

The 2022 data shows that carbon dioxide emissions from natural gas combustion have been increasing over the years while coal and petroleum usage have been slowly decreasing. Coal combustion had an increase in 2021 but is trending down again with a 6% decrease from 2021. The rise in natural gas combustion emissions was seen across all sectors except in the U.S. Territories sector. The trends in CO₂e emissions from fossil fuel combustion are subject to various long-term and short-term factors. Yearly fluctuations are often tied to changes in economic conditions, energy prices, weather, and the availability of non-fossil fuel alternatives. For instance, a year marked by high consumption, low fuel prices, and extreme weather events is likely to see increased fossil fuel use compared to a year with an economic downturn, high fuel prices, and mild weather. The trends from 2021 to 2022 show the continuing effects of the COVID-19 pandemic, which initially decreased fossil fuel demand in 2020 but led to an increase as activities resumed in 2022. However, more permanent shifts in energy usage patterns are influenced by broader societal trends such as population growth, the number of vehicles, house sizes, and the efficiency of energy-consuming equipment. Social planning and consumer behavior, like choosing to walk, bike, or telecommute, also play a significant role in these long-term changes.

The Land Use, Land-Use Change, and Forestry (LULUCF) sector offset 13.5% of total emissions in 2022. These activities include reducing deforestation and ecosystem restoration, which help in carbon sequestration. An important driver in improving the LULUCF sector is forest management practices.

The report also provides information on the sources and sinks of specific greenhouse gases, with transportation, electricity generation, and industrial activities being the three largest sources. Transportation accounts for the largest portion of GHG emissions at 28.4% with the lowest sector being residential emissions. The full trends for GHG emissions by sector are shown in Figure 2 (U.S. EPA Document No. 430-R-24-004). The transportation and electric power industry sectors saw a dip in emissions in 2020 due to the COVID-19 pandemic and 2021 and 2022 emissions reflect the economic rebound.

Figure 2
U.S. Greenhouse Gas Emissions Allocated to Economic Sectors

Since 1990, the United States has seen a marginal decline in greenhouse gas emissions, averaging a 0.01% annual decrease. GHG emissions peaked in 2005 and have been consistently declining since. The rate of decline in emissions has been slightly slower compared to the growth in total energy usage, fossil fuel consumption, as well as the overall growth of the nation’s gross domestic product (GDP) and population, shown in Figure 3 (U.S. EPA Document No. 430-R-24-004). This trend is due to the increase in energy efficiency technologies and GHG emissions reduction strategies.

Figure 3
U.S. Greenhouse Gas Emissions Per Capita and GDP

What is the Direction for the Future?

The U.S. GHG Inventory offers valuable information for decision-makers as they deal with climate change. The report highlights the need to reduce GHG emissions from the transportation and industrial sectors, which are the largest contributors to GHG emissions. There is potential for more carbon regulations to reduce the GHG emissions associated with these sectors. It also demonstrates that economic growth and GHG emissions reductions can be achieved simultaneously.

Strategies the U.S. can promote to reduce GHG emissions include transitioning to clean energy sources, promoting energy efficiency, and supporting the development of low-emissions transportation options. Recently these strategies have been promoted through the Inflation Reduction Act (IRA) and the Advanced Energy Project Credit (48C) Program.

Conclusions

The Annual U.S. Greenhouse Gas Inventory reveals the sectors that are the largest sources of GHG emissions in the country. Overall, GHG emissions increased from 1990 to 2000 then plateaued until the decline starting in 2008. There has been a decrease in GHG since the peak in 2005 but it is not at the necessary rate to mitigate the largest impact of climate change, according to the Intergovernmental Panel on Climate Change (IPCC). Although there has been success in lowering emissions, there is still a lot of effort needed to meet the economy-wide net-zero by 2050 objective set by the IPCC.

If you have questions about how to interpret this report or would like to discuss how your company contributes to GHG emissions, we would be glad to talk with you. Please contact Louise Shaffer at lshaffer@all4inc.com or your ALL4 Project Manager to discuss how we can help develop or improve your corporate GHG inventory or develop a strategy to reduce your GHG footprint.

Updates On Michigan’s Integrated Report

In March 2024, the Michigan Department of Environment, Great Lakes, and Energy (EGLE) Water Resources Division (WRD) published the newest version of Michigan’s Integrated Report, “Water Quality and Pollution Control in Michigan 2024” (Integrated Report or Report). The Report is prepared every two years pursuant to the requirements of the Clean Water Act (CWA) to provide water quality protection and monitoring information to the United States Environmental Protection Agency (U.S. EPA), Congress, and state and local agencies.

What does the update include?

The most important part of the publication is the identification of impaired water segments statewide, referred to by the regulatory citation mandating it, the 303(d)/305(b) List. The Report also provides information on the drainage basin codes for the state and public comments received and responded to before publication. The Report provides the updates made to the 303(d)/305(b) lists since the previous publication, specifically the 303(d) portion of the list identifies all the state waterbodies that currently have or were identified as requiring a total maximum daily load (TMDL), and the 305(b) portion of the list provides an assessment of the quality of surface waters. The full Integrated Report can be found on the EGLE website.

What effect does the update have on the industry?

When a surface water is identified as impaired, EGLE develops a TMDL for the pollutant(s) identified with the intention to restore the waterbody to attain the designated use and maintain the water quality standards. Once U.S. EPA approves the TMDL, the waterbody is removed from the 303(d) list, but its quality status continues to be tracked in the 305(b) list. Discharges to impaired waterbodies identified on the 303(d)/305(b) List impose more stringent requirements on industrial dischargers.

The updates affect facilities that discharge either stormwater or industrial wastewater discharges into waterbodies that have had their status or TMDL changed. If your facility discharges to an impaired waterbody, additional compliance activities may be automatically imposed based on your current permit(s). These activities could include, but are not limited to, adding increased monitoring, structural or non-structural best management practices (BMPs), or imposing a Pollutant Minimization Plan (PMP) that the facility would have to operate under. A list of potentially applicable BMPs can be found on the EGLE website and U.S. EPA’s website.

What should you do next?

Ensuring compliance with the new updates will require an understanding of your facility stormwater and wastewater discharges. Permitting requirements for stormwater and wastewater may be triggered or removed if your facility discharges into a waterbody that was added or removed from the 303(d)/305(b) lists. Therefore, review the 303(d)/305(b) lists to see if any waterbodies near your facility have recently been added or removed. If your local waterbodies have not been added to the Lists, no further actions are needed. However, if the opposite is true, additional actions may be required to reach compliance.

ALL4 is here to help evaluate how the updated Report will affect your operations and will help facilitate your company in meeting environmental compliance. If there are any questions about the updated Report and how your Facility may be affected, please reach out to me at bhsieh@all4inc.com or your ALL4 project manager for more information.

U.S. EPA Finalizes Benzene Fenceline Monitoring for Coke Oven Facilities

In August of 2023, ALL4 covered the proposed monitoring amendments to the National Emissions Standards for Hazardous Air Pollutants (NESHAP) for Coke Ovens: Pushing, Quenching, and Battery Stacks (PQBS) and Coke Oven Batteries (COB) at 40 CFR Part 63, Subparts CCCCC and L. The United States Environmental Protection Agency (U.S. EPA) published the final amendments to the NESHAP for Coke Ovens in the Federal Register on July 5, 2024. The revisions are a result of the Clean Air Act (CAA) mandated risk and technology review (RTR) for PQBS and technology review for COB and address previously unregulated hazardous air pollutants (HAPs) and HAP emissions sources. As part of the revisions, U.S. EPA is requiring certain Coke Oven Facilities to measure fugitive benzene emissions at their fenceline (where fenceline is equivalent to the perimeter) using passive samplers.

According to U.S. EPA, benzene is ever-present at coke oven facilities, accounts for about 70 percent of emissions of all volatile compounds and is a surrogate for organic HAPs from fugitive sources at these facilities. U.S. EPA is requiring a minimum number of passive samplers collecting two-week time-integrated samples continuously, following EPA Method 325. These samples would be analyzed for benzene, background corrected for each sampling event, assessed against an annual action level, with results reported to U.S. EPA on a quarterly basis and made available to the public.

PASSIVE SAMPLING

Passive sampling involves using small inert-coated metal tubes filled with an adsorbent and special cap that allows ambient air to diffuse onto the sorbent at a fixed rate, thereby retaining the compound of interest. Following a two-week sampling period, the tubes are collected and sent to a laboratory for analysis, with new tubes installed to maintain continuous sampling.

The number of required samplers is based on the size of the COB plant per EPA Method 325, with a minimum of 12 equally spaced samplers. The final rule requires deployment of the first sampling period no later than July 7, 2025 for existing facilities and no later than July 7, 2025 or upon start up (whichever is later) for new facilities. In the final rule, U.S. EPA is requiring only coke oven facilities with production processes that have by-product chemical recovery (ByP) to conduct fenceline monitoring. U.S. EPA removed the monitoring requirement at coke oven facilities with heat and nonrecovery (HNR) because these facilities have sufficient monitoring of visible emissions to ensure minimal fugitive emissions and the operation of coke ovens at HNR facilities is under negative pressure which prevents excess fugitive emissions.

BENZENE CONCENTRATION ACTION LEVEL

U.S. EPA originally proposed an action level of 3 micrograms per cubic meter (µg/m³) benzene based on modeled fenceline concentrations from emissions inventories associated with data for 2016 and 2022 facility-wide risk assessments; however, U.S. EPA increased the action level in the final rule to 7 µg/m³ as a result of comments received regarding the unique layout of coke oven sources and the elongated shape of facility fencelines, which do not allow a sufficient receptor grid to accurately estimate the maximum ambient concentrations. This action level is intended to reflect fugitive emissions sources only and exclude background concentrations. A facility would exceed this action level when the highest of the rolling annual average fenceline concentrations (corrected for background) is greater than 7 µg/m³. Additionally, the final rule allows for reduced sampling if every sample at a monitoring site is below 0.7 µg/m³ for two years (i.e., 52 consecutive sampling events).

To account for background, each facility will determine a delta concentration (Δc), calculated as the lowest benzene sample value subtracted from the highest benzene sample value for each two-week period. This approach is intended to subtract out any estimated contribution from background emissions that do not originate from the facility. U.S. EPA is also allowing for near-field source correction which requires coke oven facilities to implement a site-specific monitoring plan (SSMP) that documents how the facility will calculate reductions in monitored benzene concentrations from non-coke oven contributions by utilizing additional benzene monitoring and on-site meteorological data. In the case of additional monitoring for near-field source correction, the proposed monitoring could be more frequent passive sampling or near-real time monitoring. If near-real time monitoring is employed, the proposed technology must consistently achieve results for benzene at or below 0.7 µg/m³.

If the rolling annual average exceeds the concentration action level, the coke oven facility must initiate a root cause analysis within five days of calculating the rolling annual average to determine the primary and contributing causes of the exceedance. This root cause analysis must be completed within 45 days of initiation, followed by the corrective action plan to reduce emissions. The coke oven facility would not be deemed out of compliance with the proposed concentration action level if appropriate corrective action measures are taken.

DATA REPORTING

To report and submit results, coke oven facilities will be required to calculate a rolling annual average within 30 days of completion of each sampling episode and report the data for each sampler within 45 days of the end of each quarterly period using U.S. EPA’s public electronic reporting and data retrieval portal. This submittal will include the individual results from each sampler, coordinates of all sampler locations, biweekly 12-month rolling average concentration values, and notes for each value (e.g., background corrections used, if the value was under detection, or an outlier that was removed from the data set). Reporting will start after the first full year of data is collected (i.e., within 45 days from the completion of the 26th biweekly sampling event).

WHAT DOES THIS MEAN FOR MY FACILITY?

Following collection of a year’s worth of data to generate a rolling annual average, your facility will need to demonstrate compliance with the action level within three years following the effective date of the final NESHAP rule (July 15, 2027).

U.S. EPA estimates costs for fenceline monitoring to be $107,000 per year; however, these costs do not include effort associated with development of a monitoring plan, data assessment, quarterly reporting, root cause and corrective action, the possibility of an SSMP, or other quality assurance activities.

HOW CAN ALL4 HELP?

As your facility advances closer toward implementation of benzene fenceline monitoring, do not hesitate to ask for assistance. ALL4 would be glad to discuss any of the following:

• Conducting a pilot study to determine if your facility has excessive benzene emissions ahead of the required monitoring.
• Developing an air monitoring plan.
• Developing an SSMP for near-field source correction.
• Installation and placement of passive samplers to meet the proposed rule.
• Installation and placement of additional benzene sampling methodologies for near-field source correction.
• Collecting, processing, and submitting samples.
• Training for facility personnel.
• Creation of tools to record bi-weekly data and calculate annual rolling averages.
• Analyzing raw data to subtract out background concentrations as appropriate.
• Installation and maintaining meteorological equipment for on-site ambient meteorological data (for SSMP source correction).
• Conducting quality assurance audits to verify the collection of representative samples.
• Preparing electronic reports for U.S. EPA.
• Preparing root-cause analysis and corrective action plans to submit to U.S. EPA if the facility exceeds concentration action level.

We can also help with strategy around implementation of the many other requirements U.S. EPA has added to the NESHAP (e.g., new standards, electronic reporting, and removal of startup/shutdown/malfunction exemptions). For more information on Benzene Fenceline Monitoring please contact Dustin Snare at dsnare@all4inc.com / 610.422.1126 or Kyle Hunt at khunt@all4inc.com / 512.705.0123.

U.S. EPA Releases EJSCREEN v.2.3

On July 9, 2024, The United States Environmental Protection Agency (U.S. EPA) released an update of its environmental justice (EJ) screening tool, EJSCREEN version 2.3. The revised tool adds new map layers and two new EJ Indexes, along with reports that are more customizable.

New EJ Indexes

The main new features of the tool are two new Environmental Burden Indicators, renamed from the “Pollution and Sources” category in the tool in the previous versions (which was somewhat misleading, as the categories did not contain any source-specific data). The two new Environmental Burden Indicators are nitrogen dioxide (NO₂), which uses National Aeronautics and Space Administration (NASA) satellite data to show average annual NO₂ levels, and drinking water non-compliance, which uses modeled drinking water system boundaries and overlays Safe Drinking Water Act violations of water systems. Like the existing Environmental Burden Indicators, these are then weighted against the demographic index of each census block to generate a corresponding EJ Index.

The addition of the water non-compliance indicator continues a trend in EJ where we have seen more of a focus on the availability of clean water to communities as opposed to a more air quality-focus that we’d seen in the first year or two of the administration’s EJ agenda. Meanwhile, the use of annual NO₂ data as an Environmental Burden Indicator seems a bit puzzling: There hasn’t been a non-attainment area for NO₂ in the U.S. in over 25 years. A review of the tool shows that a census block with an EJ Index for NO₂ in the 95^th-100^th percentile in the US, which would typically classify the census block as potentially being an EJ community, had an annual NO₂ concentration of 16 parts per billion (ppb), or only about 30% of the National Ambient Air Quality Standard for NO₂, which would not normally raise air quality concerns. While NO₂ concentrations are a concern in urban areas, using annual data does not seem like a good indicator on the potential for short term NO₂ concentrations that could raise a health concern.

Meanwhile, two of the EJ Indexes that were present in previous versions and often were closely examined, Air Toxic Cancer Risk and Air Toxics Respiratory Hazard Index, were moved to the Places tab to better represent the raw data, leaving the total number of EJ Indexes at 13 as in the previous versions.

New Maps

In additional to converting the Air Toxic Cancer Risk and Air Toxics Respiratory Hazard Index map layers, there are four additional new map layers available in EJSCREEN 2.3:

• Extreme Heat: Shows an assessment of potential for extreme heat events by census block using an average number of days over 90 degrees Fahrenheit for the period 2019-2023.
• Private Drinking Wells: Private wells provide about 20% of the population with their drinking water and because they are not regulated by federal regulations, they are often not tested and subject to having potential contamination go undiscovered. This layer shows private domestic drinking water wells by count, density, and percent population served.
• Drinking Water Area Boundaries: Shows community water system (CWS) boundaries serving over 99% of all public water customers.
• Environmental Justice Grants: Shows EJ grants and resources provided through the U.S. EPA’s Office of Environmental Justice and External Civil Rights Next Generation Grants System including:
  • Environmental Justice Small Grants Program
  • Environmental Justice Collaborative Problem-Solving Cooperative Agreement
  • Environmental Justice Government to Government Program
  • Environmental Justice Thriving Communities Technical Assistance Centers Program
  • Environmental Justice Thriving Communities Grantmaking Program
  • Inflation Reduction Act Community Change Grants Program

Other Changes

Finally, the calculation for the Supplemental Demographic Index was changed to (% Low Life Expectancy + % Low Income + % Disability + % Limited English Speaking + % Less Than High School Education”)/5.

This revised calculation adds disabilities data as one of the five categories averaged while dropping unemployment data from the calculation. This change drops the percentage of the population that are unemployed from the demographic calculations entirely.

The revised tool also contains an updated interface designed to help users navigate the tool more easily, with learning resources, new popup information, and the ability to click a “Contact Us” link to ask questions or provide feedback. The U.S. EPA Office of Environmental Justice and External Civil Rights will be holding training seminars, with the next occurring on July 24^th, and will offer office hours at noon on August 21^st.

Summary

All in all, the revisions provide the mapping of several new datasets to the tool, but don’t change the purpose or capabilities of the tool very much. When using the tool, it is important to remember that it is for screening purposes: a census block that has EJ Indexes in the highest percentiles (80^th+) does not mean that the census block is an EJ community but does indicate that further review of the community and its overall environmental burden is warranted. It is also important to remember that many state agencies have their own screening tools that are most likely to have definitive ties to what the state considers an overburdened or EJ community and potential additional requirements when it comes to permit actions in those areas.

If you have concerns about the potential implications of these updates or need help parsing through how they might impact your facilities, feel free to contact your ALL4 Project Manager or Rich Hamel. We’ll continue to monitor EJ guidance from the administration and states and the tools available to evaluate EJ concerns as they develop. We can also help you evaluate permitting risks, from EJ concerns to regulatory issues, and assist in developing a strategy to make the permitting of your project as efficient as possible.

Strategic Sustainability with Double Materiality in Corporate Reporting

Introduction 

The European Union’s Corporate Sustainability Reporting Directive (CSRD) is an important regulation that is revolutionizing how companies disclose sustainability information. Aiming to elevate sustainability reporting to the same level of rigor as financial reporting, the CSRD mandates the disclosure of specific environmental, social, and governance (ESG) topics from large companies and listed small and medium-sized enterprises (SMEs) operating within the European Union (EU), as well as for third-country companies with significant operations in the EU. Even if your company has previously reported nonfinancial data, the CSRD will likely require a significant expansion in the nature and extent of your disclosures. This blog builds on an earlier ALL4 blog on Double Materiality to provide updated information on the topic, including insights and pitfalls of the methodology. 

Understanding Double Materiality 

A cornerstone of the CSRD is the concept of “double materiality.” This broadens the traditional view of materiality, which focuses solely on financial impacts, to include a company’s impact on stakeholders and society. For CSRD compliance, companies must assess materiality from two perspectives: 

• Financial Materiality: This “outside-in” view examines how sustainability matters might pose material risks or opportunities affecting a company’s financial performance in the short, medium, and long term. 

• Impact Materiality: This “inside-out” perspective evaluates the short, medium, and long-term impacts on people and the environment linked to a company’s operations and value chain. These impacts can be positive or negative. 

Material risks and opportunities often arise from a company’s dependencies on natural, human, and social resources. Therefore, an effective materiality assessment requires viewing these factors from both financial and impact perspectives. Double materiality is a concept that acknowledges the interconnectedness of a company’s financial performance with its impacts on society and the environment. It requires companies to disclose how their operations and activities affect society and the environment, as well as how sustainability issues affect them. 

Timelines and Urgency 

The deadline for complying with the European Union’s (EU) CSRD is fast-approaching. Companies in the United States (U.S.) that are listed on EU exchanges or large EU subsidiaries of U.S. companies must report on 2025 data starting in January 2026. These companies need to be ready to start collecting relevant data on January 1, 2025. Non-EU based companies with revenues exceeding €150m annually for the past two years and meeting certain other requirements will report on 2028 data and file in 2029. While this may seem distant, the comprehensive nature of the required double-materiality assessment and relevant data means that companies should start preparing now. Early preparation is crucial and starting the process early allows companies to engage multiple internal departments, such as legal, audit, finance, and operations, fostering a shared understanding of the CSRD’s strategic implications. 

Steps for Conducting a Double Materiality Assessment 

1. Identifying Material Sustainability Impacts, Risks, and Opportunities: To comply with the CSRD, your company must conduct a thorough double materiality assessment. This involves identifying and evaluating both financial and impact materiality for various sustainability matters. 

2. Refining a List of Material Matters: Start by reviewing which ESG topics are most pertinent to your company. This involves: 

• Reviewing any previously conducted materiality assessments. 

• Digging into the European Sustainability Reporting Standard (ESRS). The ESRS is the reporting standard used to meet the CSRD reporting requirements. ESRS includes 12 topical standards covering environment, social, governance, general requirements and general disclosures. Sector specific guidance is under development by the European Financial Reporting Advisory Group (EFRAG). 

• Consulting with executives, the head of investor relations, and internal finance and risk teams. 

• Assessing potential ESG impacts on supply chain partners. 

• Consulting industry-specific materiality guidance from the International Financial Reporting Standards (IFRS) Foundation and the International Sustainability Standards Board (ISSB), which now has oversight over the Sustainability Accounting Standards Board (SASB) Standards. 

• Engaging a wide array of stakeholders, including customers, employees, shareholders, regulators, civil society, community organizations, and suppliers, is also crucial. This helps compile a comprehensive list of material matters and their relative importance from both financial and impact perspectives. 

3. Scoring the Matters: Companies must score the shortlisted matters on both financial and impact materiality. This involves analyzing the scale, scope, irremediability, and likelihood of the company’s impacts on each issue, as well as assessing the actual or potential effects of each issue on the company’s financial performance. It’s important to note that while companies currently rely on qualitative scales, there is an expectation to quantify these material risks and opportunities over time.  

4. Developing a Double Materiality Matrix: Once all ESG matters have been scored, they need to be mapped against each other to determine what is and isn’t a material issue, informed by a set materiality threshold. The matrix should guide business strategy and sustainability reporting, with matters deemed material triggering mandatory disclosure under the CSRD. Companies have the leeway to develop their own thresholds for both impact and financial materiality, but it is essential to engage audit functions to ensure these thresholds are validated internally. 

Common Pitfalls and Key Insights 

A common mistake companies make is rushing the materiality assessment without adequately documenting the process. This oversight can lead to compliance risks and challenges in report preparation. Thorough documentation can save time and resources in the long run. Another pitfall is analyzing sustainability matters only at the topic level without defining impacts, risks, and opportunities, and where they occur in the value chain. It is crucial to consider subtopics and map specific components of the value chain to improve the accuracy of the materiality assessment. Many companies have not fully integrated sustainability matters into their strategic planning, reporting frameworks, and risk management, so the materiality assessment can take longer for these companies. Using tools such as scoring mechanisms, web scraping, interviews, workshops, and peer benchmarking can help evaluate impacts and the level of risk and opportunity. 

Running the materiality assessment in a siloed manner can lead to incomplete reporting outputs and long-term issues. Engaging both enterprise and subsidiary legal entity stakeholders ensures that critical components of the value chain are included, and that the assessment is aligned across the organization. Robust documentation of the materiality assessment is critical, including policies, procedures, tools, key assumptions, and governance levels used to identify and apply applicable criteria. Involving your assurance practitioner early in the process can help align expectations and address potential concerns before the start of the assurance engagement. 

Benefits of Embracing Double Materiality 

Embracing double materiality yields numerous benefits, from meeting sustainability-conscious consumer demands and attracting responsible investments to spurring innovation and ensuring compliance. Here’s a breakdown of how double materiality shapes the future of businesses: 

• Holistic Risk Management: Companies can proactively address environmental and social risks, enhancing overall resilience. 

• Elevated Sustainability Significance: Demonstrating a commitment to sustainable practices builds trust and loyalty among stakeholders. 

• Stringent Regulation Compliance: Integrating double materiality helps companies stay ahead of global regulations. 

• Catalyzing Innovation and Relevance: Spurring eco-friendly innovation aligns products and processes with environmental and social impact. 

• Resilient Supply Chains: Assessing suppliers’ sustainability challenges helps forge robust, responsible, and efficient supply chains. 

In an ever-evolving business landscape, sustainability is paramount for achieving success. Companies that integrate both financial and impact materiality into their decision-making processes can effectively manage risks, build trust among stakeholders, and pave the way for sustainable growth. Embracing double materiality is not only ethically crucial but also a prudent approach to thriving in a world demanding sustainable practices. The time to start is now, ensuring that your company is prepared to meet the CSRD requirements and lead in sustainable corporate governance. 

ALL4 Can Help Your Company Navigate Double Materiality and CSRD Compliance 

As the deadline approaches for companies to conduct double materiality assessments and comply with the EU’s CSRD, staying ahead of evolving climate regulations and expectations is crucial. Not sure if you are obligated under CSRD? The second installment of our CSRD coverage will detail who is obligated and the timeline of the reporting requirements. If you want to explore your obligations right away, please reach out to ALL4. ALL4 provides the expertise and resources your company needs to navigate these complexities. We specialize in guiding businesses through the intricate landscape of sustainability reporting, ensuring compliance with federal guidelines, and enhancing overall resilience. 

With ALL4’s support, your company can build a sustainable, resilient future and seamlessly navigate the complexities of CSRD compliance. ALL4 can assist your business in the following ways: 

• Materiality Assessments: We help you identify key environmental, social, and governance impacts to prioritize your sustainability efforts, ensuring you meet CSRD requirements with a thorough and strategic approach. 

• GHG Accounting Procedures: Our experts have more than 15 years of experience developing Scope 1, 2, and 3 GHG inventories following the GHG Protocol and other procedures to ensure accurate GHG reporting and providing third-party verification services, critical for meeting CSRD standards. 

• ESG Reporting Strategies: Enhance transparency and accountability through comprehensive ESG reporting. We provide tailored strategies that align with CSRD mandates, ensuring your disclosures are both compliant and impactful. 

• Carbon Reduction Targets: Establish and pursue net-zero goals to mitigate your carbon footprint. Our team helps you set realistic and ambitious carbon reduction targets, supporting long-term sustainability and regulatory compliance. 

• Climate Initiatives: Develop and implement comprehensive strategies for climate adaptation and resilience. We ensure your initiatives are robust and aligned with both current and future regulatory requirements. 

• Supply Chain Risk Assessments: Identify exposure to disruption across your facilities, suppliers, customers, and resources. Utilizing ALL4’s Risk Visualization tool, we clarify hotspots and plan for resilience, ensuring your supply chain is secure and compliant. 

• Physical and Transition Risk Assessments: Align your assessments with the Task Force on Climate-related Financial Disclosures (TCFD) methodology. Our experts ensure you are prepared for both physical and transition risks, critical for comprehensive CSRD compliance. 

For inquiries on whether your company is required to report via the CSRD, or about ALL4’s services, or questions regarding how our climate adaptation strategies can enhance your operations, please contact one of ALL4’s ESG and Sustainability Practice leaders: Practice Director, Connie Prostko-Bell, at cprostko-bell@all4inc.com; Technical Director, Daryl Whitt, P.E., C.E.M., at dwhitt@all4inc.com; or Managing Consultant, James Giannantonio, PMP, LEED AP, at jgiannantonio@all4inc.com. 

Washington State Environmental Justice – Climate Commitment Act and Healthy Environment for All Act

In 2021, Washington state legislature passed the Healthy Environment for All Act (HEAL Act), as a coordinated effort to prioritize environmental justice (EJ) and to identify and address environmental health disparities in overburdened communities and for vulnerable populations. Additionally, Governor Jay Inslee signed the Climate Commitment Act (CCA) to set climate policy standards and implement a cap-and-invest program aimed at reducing carbon emissions over time.

HEAL Act Regulatory Background

The HEAL Act was developed based on recommendations from the Environmental Justice Task Force in Washington and it implements EJ goals through empowering various agencies within the state to collaborate and ensure equitable investing in communities regarding environmental and health burdens in the State of Washington. These agencies include the Washington State Department of Health (DOH), state departments of Agriculture, Commerce, Ecology, Natural Resources, and Transportation, and the Puget Sound Partnership, while also allowing for other state agencies to opt in. Several key elements implemented as part of the HEAL Act include incorporating EJ in agency work and strategic planning, promoting equitable investments across communities, creating a voice for disproportionately affected communities, creating tools and processes to evaluate and track EJ metrics, and conducting EJ assessments for significant regulatory actions.

CCA Regulatory Background

Washington has committed to greenhouse gas (GHG) emissions reduction goals for the upcoming decades across the state. The CCA aims to cap and reduce GHG emissions in some of the state’s largest emitting industries and sources by creating a cap-and-invest program to incentivize businesses to cut their emissions. The CCA also aligns with the requirements of the HEAL Act to incorporate and evaluate EJ and to ensure that communities disproportionately affected by climate change can also benefit from a healthier environment. Furthermore, the CCA includes the possibility of “linking”, which gives Washington state the ability to link its climate program with California and Québec’s programs, as well as other states in the future, to potentially help lower compliance costs. California and Québec connected their carbon market programs in 2014 to create a singular shared carbon market, and all three programs have expressed mutual joint interest in linking for a shared carbon market.

How does the CCA cap-and-invest program work?

The goal of the CCA cap-and-invest program is to promote the development and implementation of clean technology and to drive down GHG emissions. The revenue that is raised by this program would be redistributed to Washington communities in the form of climate resilience programs, healthier air quality, and clean energy. The CCA imposes a cap on all major sources of GHG with enforceable and decreasing limits to meet Washington’s GHG reduction goals for 2030, 2040, and 2050. Facilities subject to the cap-and-invest program would need to hold one “allowance” per ton of GHG emitted. The state only creates as many allowances as the cap allows for that year, so the carbon price would be auctioned, and allowance prices set by the market.

The first CCA compliance deadline for facilities is November 1, 2024, at which point businesses will need to have obtained allowances to cover at least 30% of their 2023 GHG emissions. Auctions will be held quarterly for facilities to bid and obtain those allowances through sealed-bid auctions. Failure to comply with the program can lead to fines from Washington’s Department of Ecology (DOE) for fines up to $50,000 per violation, per day.

Who is subject to the cap-and-invest program?

With the exception of waste to energy facilities used by a city or county solid waste management program, businesses that generate carbon dioxide equivalent (CO₂e) emissions of 25,000 metric tons or more are subject to this program. Several other businesses and industries are also subject to the program, including fuel suppliers, natural gas and electric utilities, and starting in 2027 and 2031, waste-to energy facilities and railroads, respectively. A complete applicability list can be found at WAC 173-446-030.

Proposed Rulemaking Updates and Public Comment

Washington state is proposing to update the CCA program rules, making amendments to address new and revised cap-and-invest offset protocols. The DOE is planning to hold public meetings and has recently announced an extension to the informal comment period for this proposed rule update. The comment period has been extended to September 27, 2024, at 11:59 pm. Comments can be submitted online. A record of upcoming meetings and past public meeting documents and records are available on the DOE’s website.

The DOE is holding an online linkage EJ listening session on July 22, from 9-11 am Pacific Time to discuss the cap-and-invest carbon market and the potential linkage with the joint California-Quebec carbon market. As mandated by the HEAL Act, an EJ assessment is required to be conducted prior to making a decision on a joint carbon market, to evaluate the potential EJ impacts this action may have. This listening session will also evaluate the potential impact on Tribal communities, and other communities disproportionately affected by EJ issues.

Other Similar State Programs

Several other states have similar cap-and-invest programs and proposals in place. For example, Pennsylvania Governor Josh Shapiro has proposed to enroll Pennsylvania in a multi-state cap-and-trade program as part of his proposed energy plan. The Pennsylvania Climate Emissions Reduction Act (PACER) would help create such a program to incentivize the reduction of GHG emissions and help provide funding to support cleaner energy for the state. A similar program exists in neighboring New Jersey, which is the multi-state Regional Greenhouse Gas Initiative (RGGI) program to establish a regional cap on CO₂ emissions and require allowances for CO₂ emissions, and includes power plants and businesses in Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont. The New York state Climate Leadership and Community Protection Act (CLCPA) has a similar cap-and-invest program, and more and more states are in the process of developing such programs and looking to create regional and linked programs across the nation.

Next Steps

ALL4 will continue to monitor the proposed CCA rule revisions and updates for a final rule. If your facility is potentially subject to one of the cap-and-invest programs, ALL4 recommends reviewing the applicability regulations and gathering more information on the upcoming auctions to ensure compliance by the November 1, 2024, compliance deadline, and registering online for the July 22 listening session to learn more about the proposed joint market.

For inquiries about ALL4’s services or follow-up questions regarding the CCA or Heal Act, please contact ALL4’s ESG and Sustainability Managing Consultant, James Giannantonio, at jgiannantonio@all4inc.com and/or Project Engineer Corey Prigent at cprigent@all4inc.com.

Recent SCOTUS Decisions of Interest

Generally, congress makes laws (also known as statutes), the agencies like the U.S. Environmental Protection Agency (EPA) write regulations based on those laws, and the courts judge whether the regulation or implementation of the regulation is within the scope of the law. The Supreme Court of the United States (SCOTUS) issued several interesting decisions recently, some of which affect environmental regulations more directly than others.

For example, in Ohio et al v. EPA et al, decided June 27, SCOTUS issued a stay of the Good Neighbor Plan (GNP). U.S. EPA published the GNP, also known as the Ozone Transport Federal Implementation Plan (FIP), in the Federal Register on June 5, 2023. The purpose of the rule was to establish restrictions on NOx emissions from electric utility and industrial combustion sources in over 20 states where U.S. EPA determined emissions were impacting a downwind state’s ability to achieve the 2015 ozone National Ambient Air Quality Standards (NAAQS) and had disapproved their State Implementation Plan (SIP) submitted to fulfill the “good neighbor” clause in the Clean Air Act. In 2023, 12 states were awarded stays of U.S. EPA’s SIP disapprovals, pending the outcome of litigation, so the GNP did not go into effect in those states. Several parties challenged the GNP in the D.C. Circuit.

Because the D.C. Circuit Court did not agree to stay the rule, several parties requested an emergency stay from SCOTUS. The petitioners argued that the GNP was no longer valid because it relied upon the participation of all 23 states, and that the SIP disapprovals and the GNP itself have various flaws. SCOTUS granted the stay because the majority of judges believe that the groups that have sued U.S. EPA over the rule are likely to win their challenges. The outcome is that the 2023 GNP is currently paused in all states, even as U.S. EPA had proposed to expand it. Stay tuned for updates as litigation proceeds. If petitioners are successful, the GNP could be remanded to U.S. EPA for revisions, and we will see another proposal and subsequent final rule. If U.S. EPA is successful in defending the rule, the GNP could be allowed to go into effect with extended compliance deadlines.

There are two other decisions that could affect the process of litigating U.S. EPA rules. You may have seen a myriad of articles with varying viewpoints on the Loper Bright v. Raimondo case, decided June 28, 2024. In that decision, SCOTUS formally discontinued the practice of what was known as Chevron deference. The Chevron case was decided in 1984 and was actually a departure from the traditional approach the courts had taken until that time. Congress writes laws or statutes and then agencies write regulations. Sometimes there are questions about how agencies have interpreted statutes when they have written their regulations. Traditionally, it was the courts’ role to interpret the statute and decide legal questions by applying their own judgment. The Chevron case held that if the statute was silent or ambiguous about the question at hand, the court had to defer to the agency’s interpretation as long as it offered a “permissible construction of the statute,” even if it was not what the Court would have decided on its own. Although Chevron was applied in a limited fashion since then (e.g., there have been cases where courts have determined that although an agency’s interpretation was permissible it was not reasonable), SCOTUS determined that it does not align with the Administrative Procedure Act (APA) and that it “prevents judges from judging.” (The APA governs the process by which federal agencies develop and issue regulations and provides standards for judicial review.)

There are various opinions on what this means, but it likely just means that this is another way that lawyers will work to argue cases. This is much the same situation as the outcome of West Virginia v. EPA, where SCOTUS relied on the “major questions doctrine” to determine that U.S. EPA lacked authority to issue the Clean Power Plan. That case didn’t result in a wholesale dismantling of environmental regulations and this one is not likely to, either. Courts are still likely to give deference to agencies on technical issues, but not as much on questions of regulatory authority if there is a more reasonable interpretation.

The other case, Corner Post v. Board of Governors, decided July 1, 2024, is one that has gotten a little less press, but also involves the APA. The question there was around the time period in which a petitioner must assert a claim. In that case, SCOTUS ruled that the six-year statute of limitations was not from the date of final agency action but from the date when the plaintiff suffers an injury from agency action. This case has limited applicability because other Acts, like the Clean Air Act, have time periods that supersede the APA. For example, the CAA states that litigation has to be filed within 60 days after EPA issues a rule.

While these decisions have generated significant attention and a wide variety of polarized media reporting, we’ve been thinking them through as consultants here at ALL4. The legislative and regulatory process that has existed for decades will continue. The legislature will draft new laws and revise existing laws as they see fit to protect public health and the environment. Agencies will continue to regulate under the authority granted to them by those laws and will continue to propose and finalize regulations that they deem necessary to protect public health and the environment.  The demise of all environmental regulations that has been portrayed in some venues is not a reasonable outcome of these cases. ALL4 will continue to support our clients in complying with regulations, evaluating proposed regulations, and implementing new regulations. Let us know if you have a different reaction to these latest developments – we would love to hear from you.