Environmental Compliance: Lessons Learned the Hard Way

1. Environmental Compliance:Lessons Learned the Hard Way Craig J. Pritzlaff

2. A little about myself… • B.S. Bioenvironmental Sciences, Texas A&M University • Worked with local, state, and federal environmental authorities • J.D. Southern Methodist University • Now practice environmental law, commercial litigation • Practice focuses on environmental compliance, permitting, enforcement, and litigation and covers all media (RCRA, CERCLA, CWA, CAA, FIFRA, EPCRA etc.)

3. Three times a charm? Another lesson learned… • Over $700M spent to-date • Significant liability outstanding • Decades of litigation ahead

4. Your Goal • As an environmental and health and safety professional you are charged with ensuring that your client/company complies with environmental and health and safety laws.

5. Things to be concerned about: Numerous laws and increased enforcement: • Federal * • State • Local **

6. Things to be concerned about: Issues: • Regulations are complex • Applicability of regulations to specific processes can be subjective • Penalties for non-compliance are severe • Ignorance is not an excuse

7. Lessons Learned • Great companies that are well managed have found themselves in big trouble for inadvertent violations • Areas of compliance where you can learn from their mistakes. . . . . • Reporting releases • Filing reports • Selling fire ant killer • Risk management plans

8. LESSONS LEARNED RELEASE REPORTING

9. Lessons Learned: Release Reporting • Environmental laws such as CERCLA and EPCRA and their state counterparts require any person in charge of a facility, as soon as he or she has knowledge of a release of a hazardous substance in quantities equal to or exceeding in any 24 hour period the reportable quantity (RQ), to immediately notify the government. • Simple translation of the law is: • The law means immediate reporting upon knowledge of the event.

10. Lessons Learned: Release Reporting

12. Lessons Learned: Release Reporting IMMEDIATELY State: 800-832-8224

13. Lessons Learned: Release Reporting • In the context of environmental reporting, immediately means… • “As soon as you have knowledge of a release equal to or greater than a reportable quantity” • This is interpreted by EPA and state environmental agencies to mean within 15 minutes but no later than 1 hour after the release occurs. • Immediate = 15 minutes

14. Lessons Learned: Release Reporting • Knowledge: Ignorance is bliss…?

15. Lessons Learned: Release Reporting • Knowledge • Knowledge means simply knowing that a release has occurred • It does not mean knowledge of every detail concerning the release.

16. Lessons Learned: Release Reporting LESSONS LEARNED: Plan Ahead • Plan Elements 1. Know what the RQs are for toxic substances that could be released from your facility 2. Know how much volume or at what rate of release or emission it takes to exceed an RQ 3. Know who to call and how to answer the questions they are going to ask… • chemical name • is the substance an EHS • location • estimated quantity • time and duration of release • health risks • proper precautions. 4. Finally, environmental staff should not be allowed to go on vacation.

17. LESSONS LEARNED FILING REPORTS - TRI

18. Lessons Learned: TRI • Section 313 of EPCRA requires that all facilities inform the public of any release of a toxic chemical that cumulatively exceeds threshold planning quantities • Section 313 chemical list (40 CFR 372.65) contains over 600 chemicals • Simple translation of the law is: • You have to file a “Form R” every year estimating the quantities of chemicals released from the facility

19. Lessons Learned: Release Reporting • Facilities subject to Section 313: • 10 or more full-time employees • fall within specific SIC/NAICS codes • “manufacture”, “process,” or “otherwise use” a toxic chemical in excess of the reporting threshold • “manufacture” or “process” threshold = 25,000 lbs • “otherwise use” threshold = 10,000 lbs • Lower thresholds for certain persistent toxic compounds like lead (100 lbs), mercury (10 lbs) PACs (100 lbs), dioxin-like compounds (.1 gram)

20. Lessons Learned: Release Reporting

21. Lessons Learned: Release Reporting • LESSONS LEARNED: Do Not Rely on How Things Have Always Been Done • Make an independent assessment of any report that is submitted to a regulatory agency, especially those prepared the same way over time

22. LESSONS LEARNED SOFTLY KILLING FIRE ANTS

23. Lessons Learned: FIFRA • Requires that all pesticides must be registered – no person may sell or distribute any unregistered pesticide • Pesticide includes any substance or mixture of substances intended for preventing, destroying, repelling, or mitigating any pest

25. Organic fire ant killer and other products sold to control fire ants Lessons Learned: FIFRA

26. Lessons Learned: FIFRA • Lesson Learned: know the laws/programs that might apply to business activities, even seemingly innocuous or “good conscious” activities may fall within regulatory programs and lead to enforcement

28. Risk Management Plan (RMP) • Section 112(r) of the Clean Air Act requires that owners and operators of stationary sources producing, processing and storing extremely hazardous substances have a general duty to identify hazards associated with an accidental release, design and maintain a safe facility, and minimize consequences of accidental releases that occur. • TheRisk Management Plan (RMP) is required to be developed by subject facilities and includes an executive summary, registration information, off-site consequence analysis, five-year accident history, prevention program and emergency response program. • EPA conducts inspections and RMP audits of facilities subject to CAA 112(r) in order to determine compliance with the statute and regulations by reviewing documents and verifying the quality of the overall preparedness, prevention and response program. EPA inspectors observe and document violations by collecting physical evidence necessary to successfully prosecute violators.

29. Risk Management Plan (RMP) • Simple translation of the law is: • There is a duty on owners and operators that use extremely hazardous substances (EHS) to do so safely. The RMP outlines the plan for preventing and responding to accidents • RMPs are low-hanging fruit for EPA inspectors and criminal investigators

30. Risk Management Plan (RMP) • Recent quote from an EPA Criminal Lawyer… • “Environmental crimes can be very complicated. Most of the defendants are white collar defendants with no previous criminal history, such as Environmental Managers or Plant Managers. We [i.e. the government] charge defendants with as many violations as possible knowing that we [the government] need a conviction on just one count. RMP violations are easier to prove than other violations, so… we often look at RMPs during a criminal investigation.”

31. Risk Management Plan (RMP) • BP Refinery Explosion, Texas City, March 23, 2005

32. Risk Management Plan (RMP) • 15 people killed…175 injured…worst workplace accident since 1989 • Company pled guilty to a violation Risk Management Plan requirements set forth in Section 112(r) of the Clean Air Act for failing to maintain the mechanical integrity of the refinery • On March 12, 2009, the federal judge approved the plea agreement, which fines BP $50 million in criminal penalties and sentences the company to 3 years probation

33. Risk Management Plan (RMP) • LESSONS LEARNED: Heed warnings from the government • Focus on your RMP because that is the first place the government will look for prosecutable offenses in the event there is an accident at your facility

34. EPA Penalty Policies: provide uniformity and discretion in amount of penalty assessed Policies and most authorities give EPA discretion in negotiations to consider level of penalty, including degree of actual or threatened harm to environment or regulatory process; history of non-compliance; degree of culpability; attitude of company; other factors Enforcement Recap

35. Lessons Learned • Plan ahead • Don’t rely on past performance to dictate future actions • Heed government warnings • Focus on matters before they become an issue of government concern • Conduct regular internal audits

36. Voluntary Audits • Texas Environmental, Health, and Safety Audit Privilege Act • Potential immunity from civil and administrative penalties • EPA Audit Policy • Potential mitigation of gravity component, but economic benefit of non-compliance not mitigated • Audit must be voluntary and cover matters not otherwise subject to disclosure in reporting

37. Craig J. Pritzlaff Curran Tomko Tarski LLP 2001 Bryan Street, Suite 2050 Dallas, Texas 75201 214.270.1419 wk cpritzlaff@cttlegal.com