After almost a decade of neglect, EPA is once again actively encouraging facilities to utilize the agency’s Audit Policy to “address noncompliance in an efficient and timely manner.”  Over the last several months, EPA has taken steps to promote use of the “e-Disclosure” system and to remind regulated entities of the benefits of the Audit Policy, which allows for substantial (near 100% in many cases) penalty reductions for violations that are self-disclosed and promptly corrected.

In announcing the launch of the new campaign on May 15th, EPA declared the agency’s “renewed emphasis on encouraging regulated entities to voluntarily discover, promptly disclose, expeditiously correct, and take steps to prevent recurrence of environmental violations.”  This renewed emphasis is consistent with the current EPA’s focus on improving compliance through mechanisms, including voluntary self-correction, that achieve environmental goals more quickly and in a less costly, adversarial and time-consuming manner than traditional enforcement means.

More specifically, in the months since the initiative was launched, EPA has sought to expand use of the Audit Policy by enhancing and promoting:
→ the online “eDisclosure” program;
→ the additional flexibility available to new owners who self-disclose violations (“the New Owner Policy”); and,
→ opportunities to increase compliance through use of existing self-disclosure policies or tailored audit programs.

In its May statement, EPA explicitly aimed to remind the regulated community that the Audit Policy offers significant benefits, including:

(1) elimination of 100% of the gravity-based civil penalty that otherwise might apply (in the vast majority of Audit Policy disclosures, EPA will only seek to recover the “economic benefit”portion of a potential penalty);
(2) waiver of the economic benefit component of a potential penalty where EPA deems it insignificant;
(3) does not require advance notice to EPA of an audit;
(4) does not impose time limits on audit completion; and
(5) can provide clarity by defining allowable violation correction time periods.

To obtain these benefits, an audit should be structured and documented appropriately to help facilitate disclosures that best protect a company from liability and obtain maximum penalty mitigation.  In particular, the scope and conduct of the audit should be well-defined and systematic, including documentation of findings and timely review of conclusions to ensure that violations are promptly disclosed within the 21-day time requirement of the Audit Policy.

The New Owner Policy also provides significant potential benefits and incentives for companies that want to make a ‘‘clean start’’ at newly acquired facilities by addressing environmental noncompliance that began prior to acquisition.  Some of the policy’s key incentives and areas of flexibility include:

(1) the ability of new owners to enter into audit agreements that incorporate disclosure reporting that is appropriate to their unique situation;
(2) the waiver of economic benefit penalties that otherwise might apply to delayed expenditures; and
(3) more generous treatment of violations discovered through already legally mandated monitoring, sampling or reporting that would not normally be considered “voluntarily discovered” (such as testing pursuant to a Title V permit).

Aside from provisions specific to new owners of facilities in the upstream oil and gas industry, none of the recent “announcements” reflect any substantive change to the Audit Policy.  EPA’s decision to issue a public statement of support for the Audit Policy, however, is an encouraging signal to the regulated community.

The Audit Policy was used extensively during the Bush Administration, but was effectively discontinued during the Obama Administration.  The move is an affirmative sign that this Administration is more amenable to penalty mitigation for voluntarily discovered and disclosed violations, and a tangible manifestation of recent pronouncements out of the Office of Enforcement and Compliance Assurance that the agency is focused chiefly on finding ways to improve compliance and less towards punishment of violators.

More info on the Audit Policy and and the New Owner Policy can be found at: https://www.epa.gov/compliance/epas-audit-policy.

 

 

** UPDATE 8/29/2018 ** NTP just released a draft report recommending that “frequent and long term night shift work … that causes circadian disruption is known to be a human carcinogen” based on human studies.  Continue Reading This is Not a Dream … Agencies Actually are Reviewing the Cancer Risks of Night Shift Work (UPDATED)

The European Union (EU) is about to dramatically expand the reach of mandatory chemical disclosure requirements for consumer products.  The European Chemicals Agency (ECHA) announced recently that it is preparing to launch, by the end of 2019, a new database on the presence of hazardous chemicals in articles.  The database will be populated with information submitted by companies  producing, importing or selling articles into the EU that contain REACH Candidate List substances (i.e., Substances of Very High Concern or “SVHC”).  Companies will be required to submit such information by the end of 2020.

The EU action joins and has the potential to greatly expand the burgeoning trend towards the identification and public disclosure of chemicals in consumer products.  More limited and product-specific disclosure requirements have proliferated in recent years, with, for example, numerous U.S. states now requiring disclosure or reporting for chemicals in children’s products and cleaning product disclosure requirements launching in California and New York.  The new amendments to California Proposition 65, as discussed elsewhere in this blog, now require identification of at least one chemical for which a warning is being provided, and also have spurred extensive discussions about the presence of listed chemicals among retailers, manufacturers, distributors, and anyone doing business in the state.  These are just a few of the more prominent examples of the growing interest, among consumers and regulators, in mandating that businesses publicly provide information about the chemicals in their products.

The new ECHA database is an outgrowth of both existing REACH requirements and implementation of a revised directive on waste that entered into force last month, which aims to enhance EU’s “circular economy” policy by “improv[ing] the risk management of chemicals during waste recovery and to promote non-toxic material cycles.”  ECHA explicitly recognizes that the “database aims to help consumers make informed choices for safer products” and “will also increase pressure to substitute substances of concern.”

Currently, REACH §33 provides consumers the right to request, and receive within 45 days, from a manufacturer information about the presence of SVHC ingredients in a product.  Supply chain communication of chemical information is another essential feature of REACH, but does not directly involve public disclosure. The new database, in contrast, compels disclosure of such information in a public forum.

In practice, the new disclosure requirements represent a significant expansion of the compliance obligations for businesses that sell consumer products in the EU.  Exporters of consumer products to the EU should engage with their European importers and distributors regarding compliance with the information submission requirements in preparation for the program coming online next year.  The EU action also underscores the need for every business to know information about the chemicals in their products and what, if any, hazards they may represent.

“Science and the scientific process must inform and guide decisions … The public must be able to trust the science and the scientific process informing public policy decisions.”

Former EPA Administrator Scott Pruitt introducing the 2018 proposal he championed on “Strengthening Transparency in Regulatory Science”?  Nope, this is the opening statement of President Obama’s 2009 memorandum on “Scientific Integrity.”  That Obama-era policy further instructed “[t]o the extent permitted by law, there should be transparency in the preparation, identification, and use of scientific and technological information in policymaking.”  These fundamental transparency issues, which were not particularly controversial when addressed by the prior administration (or in myriad other incarnations over the past 30 years), are at the core of EPA’s present efforts.

Who doesn’t agree with the assertion (this time from the current Science Transparency proposal) that “[e]nhancing the transparency and validity of the scientific information relied upon by EPA strengthens the integrity of EPA’s regulatory actions and its obligation to ensure the Agency is not arbitrary in its conclusions”?  Indeed, this principle is neither controversial nor new.  Under the Administrative Procedure Act, as the D.C. Circuit held in 1973, “it is not consonant with the purpose of a rule-making proceeding to promulgate rules on the basis of inadequate data or data that [in] critical degree, is known only to the agency.” Likewise, a decade later the premier regulatory appellate court in the country stated:

In order to allow for useful criticism, it is especially important for the agency to identify and make available technical studies and data that it has employed in reaching the decisions to propose particular rules.  To allow an agency to play hunt the peanut with technical information, hiding or disguising the information that it employs, is to condone a practice in which the agency treats what should be a genuine interchange as mere bureaucratic sport.

To avoid the “hunt the peanut” game, guidelines adopted by EPA in 2002 to implement the Information Quality Act require that “influential information” be subject to a high degree of transparency, including that findings must be “reproducible” (within a reasonable degree of accuracy) by third parties.  Reproducibility by others is a critical check on the quality of the study process and reported data, as well as on the inherent bias (unintentional as it may be) of researchers to find “significant” results.

Curiously, the current EPA proposal omits discussion of the ample existing legal authority specifically related to the transparency and reproducibility of public health research sponsored by the Federal Government.  As set forth in OMB guidance for financial assistance to non-Federal entities, federal agencies have unfettered legal authority to “[o]btain, reproduce, publish, or otherwise use the data produced under a Federal award,” or to “[a]uthorize others to receive, reproduce, publish, or otherwise use such data for federal purposes.”  In addition, any public health research data (a) produced under a Federal award, and (b) used by the Federal Government in developing agency action that has the force and effect of law, must be released to the public if a request for the data is made pursuant to the Freedom of Information Act (FOIA).  (Of course, anyone who has sought such information under FOIA knows well the exemptions/excuses that often are employed to inhibit release of data to which the public has a fundamental right to access.  For more, see my previous post addressing privacy concerns: https://www.kelleygreenlawblog.com/2018/06/epa-science-transparency-policy-enable-stakeholder-access-study-data/.)

Because the federal government has sponsored a substantial majority of the public health research conducted in the United States over the past 50 years, the EPA and other agencies are well positioned, using existing legal authority, to facilitate release of public health research data if they are inclined to do so as a matter of policy.

Reversing course from an Obama-era EPA agreement to initiate a rulemaking to impose spill prevention, countermeasure and control (SPCC) requirements for hazardous substances, EPA announced on June 19th that it believes that existing regulations are adequate to meet its obligations under the Clean Water Act (CWA) and no new regulatory program is needed:

Based on the reported frequency and impacts of identified CWA [hazardous substance] HS discharges, and the Agency’s evaluation of the existing framework of EPA regulatory requirements relevant to preventing CWA HS discharges, EPA has determined that the existing framework of regulatory requirements serves to prevent CWA HS discharges. Additionally, EPA identified relevant requirements in other Federal regulatory programs and determined that they further serve to prevent CWA HS discharges, providing additional support for this proposed action.

In an example of the “sue and settle” policy that the current Administration has sought to curtail, in February 2016, EPA agreed in a consent decree with environmental groups to initiate rulemaking to expand the SPCC program beyond oil to address other hazardous substances.   The settlement established an aggressive schedule for EPA to issue regulations under CWA Section 311(j)(1) by mid- to late-2019.

The CWA contemplated the development of “hazardous substance SPCC” regulations over 40 years ago.  The operative provision of the Act requires that, “as soon as practicable after October 18, 1972, and from time to time thereafter, the President shall issue regulations consistent with maritime safety and with marine navigation laws . . . establishing procedures, methods, and equipment to prevent discharges of oil and hazardous substances from vessels and from onshore facilities and offshore facilities, and to contain such discharges . . . .”  While EPA did promulgate SPCC regulations addressing the storage of oil and petroleum products such as gasoline and diesel fuel, the Agency proposed (in 1978), but never finalized regulations applicable to the storage of hazardous substances.

The SPCC regulations for oil and petroleum products apply to facilities that have the capacity to store more than 1,320 gallons of oil above ground (or 42,000 gallons in underground tanks).  They require the development of SPCC plans that include a description of containment, drainage control, and diversionary structures; proper liquid storage areas, container materials, and secondary containment; drainage for raw material storage areas; control for other site features that could produce runoff; secondary containment and treatment processes for truck and railcar liquid loading and unloading areas; and equipment that prevents discharges for in-plant transfer, processing, and materials handling areas.  SPCC plans also must address preventative maintenance, facility security, and training.  Plans must be reviewed and certified to by a registered professional engineer, and updated every five years, or more frequently, if material changes are made to the facility or its oil storage capacity.

In suing EPA over the failure to adopt a version of SPCC for hazardous substances, environmental groups cited a series of chemical spill incidents that gained widespread media exposure over the last decade.  The groups’ alleged that not only are onshore hazardous-substance storage facilities “subject to neither state nor federal regulation,” there are also “thousands of self-reported hazardous-substance spills from onshore facilities each year,” hundreds of which reach waters subject to CWA jurisdiction.  In addition, the complaint asserted that “hazardous-substance spills from non-transportation-related onshore facilities pose a disproportionate threat to low-income communities and communities of color.”

Environmental groups already are condemning the proposed decision not to proceed with a rulemaking, and litigation is highly likely to follow if the proposal is finalized.

A 60-day comment period will commence as soon as the proposal is formally published in the Federal Register.

Our aim is to provide timely and insightful analysis on the latest news and trends in the broadly defined area of chemical regulation, with a particular emphasis on regulations that effect consumer and industrial products and materials. While this blog is provided by the Environmental, Health, and Safety practice of Kelley Drye & Warren LLP in Washington, D.C., our focus will not simply be on federal U.S. developments, but will encompass relevant state and international issues as well. For example, we intend to highlight issues that we think are of particular interest to businesses – ranging from major manufacturers to consumer good distributors and retailers – in a variety of areas, such as:

  • Implementation of the amended Toxic Substances Control Act (TSCA);
  • California Proposition 65 and Safer Consumer Products programs;
  • European Union regulations under REACH, CLP, and RoHS;
  • State programs that identify and potentially restrict “chemicals of concern”;
  • Pesticides and antimicrobial product regulations; and
  • Classification and risk assessment/communication issues affecting industrial and consumer products.

We hope to provide updates that are current and informative, yet succinct and readable. The goal is not to provide a legal treatise or a comprehensive catalog of all developments, but, rather, to impart information and analysis that is thought-provoking or, at least, helpful to you in assessing whether the issue is one that merits closer examination. If there are any topics you would like us to cover, please don’t hesitate to reach out and let us know.

Finally, yes, the primary author of the blog in fact is named Joe Green. Accordingly, the title Kelley Green Law blog was irresistible. We hope you enjoy it!