Regulatory Alert - RA 05-11

NACWA Regulatory Alert (RA 05-11)

To: Members & Affiliates, Pretreatment & Hazardous Waste Committee
From: National Office
Date: October 19, 2005
Subject: EPA FINALIZES ELECTRONIC REPORTING RULE
Reference: RA 05-11

On October 13, 2005, the U.S. Environmental Protection Agency (EPA or Agency) published its final Cross-Media Electronic Reporting Rule (CROMERR) in the Federal Register (70 Fed. Reg. 59848). The rule establishes the framework under which EPA, and state and local governments authorized to run EPA programs, can accept electronic reports from regulated entities. The final rule and some basic summary information are available on EPA’s website (http://www.epa.gov/cdx/cromerrr/index.html). In addition to paving the way for clean water agencies to begin submitting key environmental reports electronically to their states and EPA, the rule is also designed to allow pretreatment programs to receive reports electronically from their industrial users. While few details are available at this time, EPA is planning a series of regional workshops to explain the rule and its potential impacts.

NACWA is generally pleased with the final rule, which becomes effective on January 11, 2006, as it uses a performance-based approach, consistent with the Association’s February 27, 2002 comments (http://www.nacwa.org/private/reg_outreach2002.cfm). However, NACWA is continuing to research elements of the rule, most notably the provisions governing electronic signatures, to determine whether they are too cumbersome to be easily implemented. States and local governments (including pretreatment programs) with an existing electronic document receiving system must submit an application to revise or modify their EPA-authorized program no later than October 13, 2007.

If you have any questions about the final rule or if you are unsure about how your agency will be impacted, please contact Chris Hornback, Director Regulatory Affairs, NACWA at 202/833-9106 or chornback@nacwa.org.

Final Rule Does Not Address Recordkeeping
The August 31, 2001, proposed rule addressed both electronic reporting and recordkeeping. NACWA and many other stakeholders commented extensively on the recordkeeping provisions of the proposal. NACWA’s comments recommended that EPA not move forward with finalizing the recordkeeping portions of the proposed rule as they were too prescriptive and did not take into consideration the extent to which electronic recordkeeping is already occurring. In line with NACWA’s comments, EPA’s October 13, 2005, notice announces that it is reconsidering its approach to electronic recordkeeping and is not issuing final recordkeeping rules at this time. The Agency is conducting additional analysis and intends to publish a supplemental notice or re-proposal to solicit additional comments before finalizing the recordkeeping provisions. NACWA intends to be a part of the stakeholder outreach EPA is planning on the recordkeeping provisions.

Overview of the Final Rule
The October 13 final rule is designed to provide a framework for electronic reporting that ensures the legal dependability of electronic documents submitted under environmental programs. EPA’s goal was to ensure electronically submitted documents are equivalent to their paper counterparts and may be used as evidence to prosecute an environmental crime or enforce against a civil violation. The final rule does not require that any document be submitted electronically and or that any state or local authorized program receive electronic documents. Rather, the final rule:

Modifies current requirements in the Code of Federal Regulations (CFR) to remove any obstacles to electronic reporting (ER) ^[1].
Allows regulated entities to submit any report electronically, but only after EPA announces that ER is available for the specific report.
Requires submission of electronic reports to EPA's Central Data Exchange (CDX) or to another designated EPA system, if electronic submission is utilized.
Requires validation of electronic signatures on reports submitted to EPA through CDX (or another designated EPA system) and ensure that valid electronic signatures have the same legal force as their "wet-ink" counterparts.
Sets forth requirements that EPA-authorized programs must satisfy when implementing ER, and provides a streamlined process for these programs to obtain EPA approval of their ER implementations.

Reporting to EPA and Requirements for EPA Data Systems
In a separate notice published on October 13, 2005, EPA clarified the status of current electronic reports that are sent directly to EPA systems. For up to two years from the date of publication, regulated entities that report electronically directly to EPA may continue to satisfy EPA reporting requirements by reporting to the same systems as they currently do until EPA publishes a notice announcing a change to, or away from, that system. During this two year period, EPA will be working to ensure its Central Data Exchange and any other designated EPA systems meet the requirements of 40 CFR Part 3.

Once the rule takes effect (January 11, 2006) documents submitted directly to EPA that are not currently being submitted electronically can only be submitted electronically after EPA announces in the Federal Register that it is ready to receive those documents. Once EPA has made the announcement that it is ready to receive a particular document electronically, regulated entities will still have the option to submit a hard copy report.

State and Local Government Acceptance of Electronic Reports
Subpart D of 40 CFR Part 3 requires that state and local government agencies operating EPA-authorized programs (such as industrial pretreatment programs) that receive, or wish to begin receiving, electronic reports under those authorized programs must apply to EPA for a revision or modification and get EPA approval. Subpart D provides standards for such approvals based on a review and consideration of the electronic document receiving system that the state or local government will use.

Generally, electronic document receiving systems operated by states and local governments must ensure that documents are what they purport to be, that any changes to their content are noted, and that any associated signatures were actually executed by the designated signatories. Section 3.2000(b) of the new regulation lists five requirements that apply to all electronic document receiving systems (timeliness of data generation, copy of record, integrity of the electronic document, submission knowingly, and opportunity to review and repudiate copy of record) and several other requirements that only apply to systems that receive electronically signed documents (validity of the electronic signature, binding the signature to the document, opportunity to review, understanding the act of signing, the electronic signature or subscriber agreement, acknowledgement of receipt, and determining the identity of an individual).

States and local governments (including pretreatment programs) with an existing electronic document receiving system must submit an application to revise or modify their EPA-authorized program no later than October 13, 2007.

Electronic Signature Provisions
One of the major obstacles to electronic reporting has been the issue of electronic signatures. Before this final rule, there were no federal rules or policies that allowed for electronic signatures of certain key environmental reports. Section 3.4 of the final rule outlines how documents signed electronically legally bind, obligate, and make the signatory responsible, to the same extent as the signatory’s handwritten signature.

The signature provisions and how they will ultimately be implemented depend on three key definitions:

Electronic signature means any information in digital form that is included in or logically associated with an electronic document for the purpose of expressing the same meaning and intention as would a handwritten signature if affixed to an equivalent paper document with the same reference to the same content. The electronic document bears or has on it an electronic signature where it includes or has logically associated with it such information.

Electronic signature agreement means an agreement signed by an individual with respect to an electronic signature device that the individual will use to create his or her electronic signatures requiring such individual to protect the electronic signature device from compromise; to promptly report to the agency or agencies relying on the electronic signatures created any evidence discovered that the device has been compromised; and to be held as legally bound, obligated, or responsible by the electronic signatures created as by a handwritten signature.

Electronic signature device means a code or other mechanism that is used to create electronic signatures. Where the device is used to create an individual's electronic signature, then the code or mechanism must be unique to that individual at the time the signature is created and he or she must be uniquely entitled to use it. The device is compromised if the code or mechanism is available for use by any other person.

Proof that a particular signature device was used to create a signature will be considered adequate evidence that the individual entitled to use that device intended to sign the document, so it will be important to have a secure system. The preamble to the rule outlines how signature devices should be protected from unauthorized access (e.g., a physical token such as a smart card or employee badge or a program to query the user for private information that could be verified), but it is not clear whether, for example, a computer programmed to prompt a user for a password or series of passwords alone would be considered an acceptable electronic signature device. This will be a critical issue to clarify and NACWA will be working to gain more insight into how this will be implemented and will share it with Association members.

Additional specific information on CROMERR can also be obtained by contacting David Schwarz, with EPA’s Office of Environmental Information at schwarz.david@epa.gov or 202/566-1704. Please relay any information that may be of use to NACWA’s members interested in utilizing electronic reporting to Chris Hornback, NACWA’s Director of Regulatory Affairs at chornback@nacwa.org or 202/833-9106.

[1] Electronic reporting as discussed in the October 13, 2005, final rule, does not include submission of any electronic document via diskette, compact disk (CD), digital video disk (DVD), or tape, as well as the transmission of documents via hard copy facsimile.