Self-disclosure made by Lakeland College, Sheboygan, WI.

As we mentioned in our October 13, 2010 blog, the Environmental Protection Agency (EPA) has turned their attention to other potential “targets” including colleges and universities. That’s why the “Weekly Activity Report for the Week of January 24, 2011 for EPA Region 5” caught my attention.

According to the Report, “On June 18, 2008, the Region executed the Audit Policy Agreement by and between the Wisconsin Association of Independent Colleges and Universities, Participating Institutions and the United States Environmental Protection Agency, Region 5. Under the Audit Agreement, participating institutions agreed to perform comprehensive environmental audits, report the audit results to EPA, and correct the violations. On January 21, 2011, EPA concluded its review of the Initial Disclosure Report and Final Report submitted by Lakeland College. Lakeland College disclosed potential violations of the Clean Air Act, Clean Water Act, Resource Conservation and Recovery Act, and Toxic Substances Control Act. EPA calculated a civil penalty for the school in the amount of $200,395. EPA concluded that this civil penalty amount was appropriately mitigated by 100 percent. It further found that the school did not obtain a significant economic benefit from the non-compliance. The participating institution has agreed to continue in place the internal procedures necessary to prevent recurrences of violations of environmental requirements.”

For more information about the EPA’s Audit Policy go here http://www.epa.gov/compliance/incentives/auditing/auditpolicy.html

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Food Processing Company Pays $183,000 Fine

According to the weekly activity report from the Environmental Protection Agency (EPA), Region 5, “On January 10, 2011, the Regional Administrator, EPA Region 5, signed a Consent Agreement and Final Order commencing and concluding a matter under EPCRA Sections 311 and 312 pursuant to which (the company) agrees to pay a civil penalty of $183,431.”

The release goes on to say, “The final order alleges violations of EPCRA Section 311 based on the (company’s) failure to timely file Material Safety Data Sheets (MSDSs) for nitric acid, gasoline, diesel, liquid nitrogen, lead, and propylene glycol to the State Emergency Response Commission (SERC), Local Emergency Planning Commission (LEPC), and local fire department.  The final order also alleges violations of EPCRA Section 312 based on failure to timely file Hazardous Chemical Inventory Forms (Tier IIs) to the SERC, LEPC, and local fire department for calendar years 2006, 2007, and 2008 by the annual March 1 reporting deadlines.”

The original proposed penalty was $282,201, but because of the company’s “cooperation” and willingness to achieve compliance, EPA reduced the civil penalty to $183,431.

This information should be available on the EPA website, but feel free to contact me (ahahn@dragun.com) and I can send you a copy of the alert I received from the Office of Regional Counsel.

Is President Obama Changing His View on Environmental Regulation?

Is there a change in philosophy in the Obama Administration?  Many industry groups have complained for years (prior to this administration) about over regulation. Recently, some groups have complained about the EPA’s “power grab” with regulation of greenhouse gases. 

For years, white and blue collar workers have decried about the loss of manufacturing jobs in the United States.  Some of the loss has been blamed on a regulatory climate that makes it very difficult for the United States to compete with other countries.

While no one wants to see a “dirty environment,” “unsafe work practices,” or our food supply put at risk, there has to be some common sense and practicality in our laws and regulations.

In what has been called a surprising January 18th Wall Street Journal Op-Ed, President Obama announced a new Executive Order,  Improving Regulation and Regulatory Review. “Over the past two years, the goal of my administration has been to strike the right balance. And today, I am signing an executive order that makes clear that this is the operating principle of our government. This order requires that federal agencies ensure that regulations protect our safety, health and environment while promoting economic growth. And it orders a government-wide review of the rules already on the books to remove outdated regulations that stifle job creation and make our economy less competitive. It’s a review that will help bring order to regulations that have become a patchwork of overlapping rules, the result of tinkering by administrations and legislators of both parties and the influence of special interests in Washington over decades.”

Commenting on the new executive order,  The National Association of Manufacturers (NAM) Senior Vice President for Government Relations and Policy, Aric Newhouse said, “Manufacturers appreciate President Obama‘s call for a government-wide review of regulations and rules. Manufacturers have been saying for some time that overregulation is harming job creation and stifling economic growth.” Mr. Newhouse went on to say, “For example, the Environmental Protection Agency’s (EPA) proposals, from regulating greenhouse gases to the Boiler MACT rule, are a real threat to America’s job creators. We stand ready to assist in the President’s efforts to address an escalating problem and meaningfully reduce unnecessary burdens on manufacturers in America so they can get back to creating jobs.” 

Here is a link to the WSJ article http://online.wsj.com/article/SB10001424052748703396604576088272112103698.html#articleTabs%3Darticle

AFO Air Study Results to be Made Public

On January 13, 2011, The Environmental Protection Agency (EPA) announced they are making publicly available, the data from a two-year study of air emissions from animal feeding operations (AFOs).

The data (parameters monitored include: ammonia, hydrogen sulfide, particulate matter and volatile organic compounds) were developed from the National Air Emissions Monitoring Study (NAEMS), which resulted from a 2005 voluntary compliance agreement between EPA and the AFO industry.

On February 8, 2006, we reported that a total of 6,700 farms were covered by the agreement. You may recall that the agreements were viewed very negatively by some activist groups, including the Sierra Club.  At that time, Ed Hopkins (Sierra Club) said, “This decision is a great disservice for the people who live around large factory farms…it basically gives these farms a free ride on the backs of the public. There’s really nothing in this that holds the polluters accountable for the toxic air emission they release.” (http://www.msnbc.msn.com/id/11111912/)

It’s likely that those who voiced opposition to the agreement in 2006 will be reviewing the data and offering their opinion regarding how large livestock farms should be regulated.

As you may recall, those who signed the agreement were afforded certain protections against lawsuits, but they are subject to certain requirements once the EPA publishes emission estimating methods (reporting and permitting obligations).  Depending on the results of the study, there were concerns that some of the new obligations could be very significant in terms of permitting and control technologies.  This remains to be seen.

 For more information, go to the EPA’s website or click here.

What does “All” mean in All Appropriate Inquiry?

The following was contributed by my colleague, Mark Resch.  Along with Jeff Bolin, Mark leads many of our environmental due diligence efforts.

It’s the age old question; how much is enough when it comes to environmental due diligence?  Some would have thought that establishing a written All Appropriate Inquiry (AAI) “standard” in the Code of Federal Regulations back in 2005 would have answered this question.  Apparently not! 

I saw an interesting article indicating the bona fide prospective purchaser (BFPP) liability defense was recently evaluated by a federal district court (“CERCLA’s BFPP Protections in Question,” www.envirobank.org, December 16, 2010).  For the first time, BFPP was found to be lacking as a persuasive argument for a company defending itself from environmental liability.  This case points to how important it is to adequately establish your BFPP defense and the need to evaluate and implement any “continuing obligations” for contaminated property (there are technical and legal implications; accordingly, we suggest you consult an attorney in addition to your environmental consultant).

The BFPP statutory required continuing obligations include

(1) Have acquired a property after all disposal of hazardous substances at the property ceased.

(2) Provide all legally required notices with respect to the discovery or release of any hazardous substances at the property.

(3) Exercise appropriate care by taking “reasonable” steps to stop continuing releases, prevent any threatened future release, and prevent or limit human, environmental, or natural resources exposure to any previously released hazardous substance.

(4) Provide full cooperation, assistance, and access to persons that are authorized to conduct response actions or natural resource restorations.

(5) Comply with land use restrictions established or relied on in connection with a response action.

(6) Not impede the effectiveness or integrity of any institutional controls.

(7) Comply with any Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) request for information or administrative subpoena.

(8) Not be potentially liable, or affiliated with any other person who is potentially liable for response costs for addressing releases at the property.

So what happened in the case referenced above?  The company had purchased the property after performing a Phase I Environmental Site Assessment that identified several recognized environmental conditions (RECs) including stained concrete and sumps containing chemicals. The company claimed BFPP status for existing contamination (an existing Brownfield), but its subsequent development led to violations of its BFPP continuing obligations. Sampling of the RECs was not performed to verify the REC.  The overlying structures that protected some of the RECs (the stained concrete and sumps) from exposure to the elements (rain, snow, etc…) were demolished by the owner.  This activity was construed as exacerbating the conditions (i.e., the RECs would not have been impacted but for the actions of the owner).  This action was seen as a disposal of hazardous substances and as not exercising appropriate care; two violations of the BFPP obligations.

With all of the above said, as it relates to maintain BFPP status, a written plan of action is recommended in regard to understanding how your proposed operations could be impacted by the RECs associated with the property.

 If you have any questions regarding the BFPP continuing obligations and its potential impact upon your business, feel free to contact the Mark Resch (mresch@dragun.com) or Jeff Bolin (jbolin@dragun.com) at 248.932.0228.

Merger/Acquisitions Are Heating Up

If the forecasts by economists and others who follow such things are correct, 2011 will see the pace of mergers and acquisitions (M&A) on the rise. Richard Peterson, Analyst, Standard and Poor’s said in a recent PBS interview that U.S. M&A activity could reach $900 billion in 2011.

M&A’s involve potential risk and potential reward.  Part of the risk is the environmental component; that is, what are the environmental liabilities associated with the company and/or property and how do you quantify this risk.

We have a new Environmental Minute that addresses M&A Environmental Due Diligence, “Merger/Acquisition Environmental Due Diligence: Putting The Potential Risks in Proper Perspective.”  If you would like a copy of this document, go to our website (www.dragun.com) or contact our office at 248-932-0228.

EPA Enforcement on the Rise?

According to a report in Environmental Compliance Alert, “Industrial and other types of operations are indeed much more likely to get hit with EPA penalties in 2011 for various environmental rule violations than ever before.” The article is based on a report from a government watchdog group, OBM Watch.

The article states that under President Obama, EPA is collecting fines in 95% of all Clean Water Act cases and closing them within 9 days. This compares to 87% collection of fines and closure in 26 days under President Bush. There is also a “big spike in fines under Obama’s EPA over stormwater violations at construction sites.”

The article also states “EPA sharply increased the number of enforcement cases” under the hazardous waste rules. Finally, Environmental Compliance Alert says, “EPA is also actively cracking down on spill and risk planning rules…”

Just a guess on my part here, but if the economy shows signs of recovery, we might see even less constraints on EPA enforcement action.

When considering environmental compliance, permitting, and planning, consult with your technical and legal team.

Here is link to the report by OMB Watch http://www.ombwatch.org/node/11402

Seminars to discuss environmental regulatory changes in Ontario

We are conducting two seminars in Ontario (Windsor, January and Burlington, February) to discuss some specific technical issues associated with implementation of O.Reg 511 including

-What do the changes to O.Reg 511 mean to you in a practical sense?

-How will the new VOC preservation technique affect Phase II activity?

-Some of the new standards are higher, some are lower; how will this affect you and your decisions?

-Will it cost more for a Phase I or Phase II investigation?

-Moreover, how will the changes affect your strategies when it comes to site investigations?

If you would like more information go to our website www.dragun.com or call our Windsor office at 519-979-7300