Tag Archives: enforcement

EPA Messes With Texas

The Associated Press says that EPA will prevent the Texas Commission on Environmental Quality (TCEQ) from issuing an air emissions permit for the Flint Hills (Koch Industries) Refinery in Corpus Christi.  The permit will be issued directly by EPA and is likely to contain substantive differences from the permit proposed by TCEQ.

Further, by June 30 EPA will invalidate 39 more air emissions permits affecting 140 plants in Texas as a result of a dispute between EPA Region 6 and the TCEQ.

Al Armendariz, [EPA Region 6 Administrator] said the EPA will issue its own permit for the independently owned Flint Hills Corpus Christi East Refinery, and in the coming days begin to do the same for 39 other plants, including facilities owned by Exxon Mobil Corp., Chevron Corp., ConocoPhillips and Dow Chemical Co.

The EPA objected to 40 permits issued by Texas late last year, Armendariz said, partly because they included so-called “flexible permits” that the agency says allow the industry to emit more pollutants than allowed under the federal Clean Air Act. Texas created its flexible permit system in 1994, but it was never officially approved by the EPA.

AP further stated that

at least five years [may be needed] to unravel Texas’ rogue permitting process and learn how much air pollution is being spewed by the nation’s largest refineries.

Incubating Environmental “Black Swans” In the Nest

Our last entry discussed the concept of “Black Swan” events, a term created by noted author Nassim Nicholas Taleb to describe an event that is (a) so low in probablility that it is unforeseeable and (b) so catastrophic in impact that it changes history.

Certainly, risk assessments are predictive in nature and no one can predict the future with complete certainty.  But in our view, one of the best tools available for risk assessments is an open mind.    This can be a challenge in the EHSS world as we generally have engineering and other technical backgrounds.  We have been trained to seek absolutes and eliminate uncertainties.  At Elm, we believe that involving external support helps to identify and explore events (and their related exposures) that are relevant but get “technically rationalized” by internal staff.

With the BP oil spill and the December 2008 Kingston, Tennessee coal ash pond failure, we began thinking about some of the Black Swan events discussed with clients in the past.  Below are a handful of EHSS Black Swan risk events that we have discussed with clients over the past years – and some that are currently on our mind.

  • Radical change in EPA’s regulation of coal ash management (discussed several years before the Kingston event, and vehemently opposed by the client)
  • Catastrophic failure of GHG emissions trading market
  • Dramatic failures/errors in GHG footprint calculation methodology
  • Nationalization of privately-owned CO2 emissions assets
  • Regulation and class-action level public concerns over chemical content of consumer goods
  • Waste disposal liability for and public pressures about exporting electronic wastes
  • Dramatic increase in OSHA/EPA enforcement – frequency, severity and targeted industries/sites
  • Major expansion of pollution exclusions/limitations in insurance policies
  • Increased success of US-based NGOs in successfully obtaining US venue for lawsuits concerning EHSS allegations for non-US sites/projects/activities
  • Unprecedented shareholder and SEC pressure on public companies related to EHSS matters
  • Increased importance of EHSS in supply chains and procurement decisions

Perhaps these seem far-fetched to you or your company.  But if that is the case, the egg of that – or another – Black Swan is quietly incubating somewhere in your organization.

Law Firm Publishes Details on OSHA Severe Violator Enforcement Program

The law firm of Morgan, Lewis & Bockius LLP has published details about the upcoming OSHA Severe Violator Enforcement Program (SVEP).  The SVEP has been in development for more than a year, but Morgan Lewis indicated that a 27-page draft Directive was sent from OSHA to state officials in early April.

Highlights from the Morgan Lewis review:

According to the draft Directive, the SVEP will “focus increased enforcement attention on significant hazards and violations” by concentrating on employers that have demonstrated “indifference” to workplace safety obligations through willful, repeated, or failure-to abate-violations in four areas: (1) fatality or catastrophe situations; (2) industries that expose employee to the most severe hazards, including those identified in the draft Directive as “High-Emphasis Hazards”; (3) industries that expose employees to the potential release of highly hazardous chemicals; and (4) egregious enforcement actions. Once an employer is selected for the SVEP, OSHA will undertake a number of enforcement steps including enhanced follow-up inspections as well as inspections at other worksites of that same employer, potentially on a nationwide basis…

OSHA will consider any inspection that meets one or more of the following criteria as a candidate for the SVEP:

  • Fatality/Catastrophic Criteria. A fatality/catastrophe inspection in which OSHA finds one or more willful or repeated citations or failure-to-abate notices based on a serious violation related to the death of an employee or three or more employee hospitalizations. Violations under this section do not need to be classified as “High-Emphasis Hazards.”
  • Nonfatality/Noncatastrophic High-Emphasis Hazards. An inspection that finds two or more willful or repeated violations or failure-to-abate notices based on high-gravity, serious violations due to a High-Emphasis Hazard.  A “High-Emphasis Hazard” is one based on a fall or a specific National Emphasis Program (NEP) identified in the draft, and thus includes (1) fall hazards under general industry, construction, shipyard, marine terminal, and longshoring standards; (2) amputation hazards; (3) combustible dust hazards; (4) crystalline silica hazards; (5) lead hazards (based on sampling); (6) excavation and trenching hazards; and (7) ship-breaking hazards.
  • Nonfatality/Noncatastrophic Hazards Due to the Potential Release of a Highly Hazardous Chemical—Process Safety Management (PSM). An inspection that finds three or more willful or repeated violations or failure-to-abate notices based on high-gravity, serious violations related to petroleum refinery hazards, i.e., hazards covered by the petroleum refinery PSM NEP and hazards associated with the potential release of highly hazardous chemicals, as defined by the PSM Covered Chemical Facilities NEP.

… Placement into the SVEP will trigger a number of serious consequences for employers. While actions taken against an employer will be judged on a case-by-case basis, SVEP employers may be targeted for:

  • Enhanced, Broad Follow-Up Inspections. Follow-up inspections of the cited workplace will be conducted after the citation becomes a final order, even if abatement verification has been received. In other words, these follow-up inspections are not limited in scope to whether the identified hazard has been abated, but will also include an assessment of whether the employer is engaging in similar violations. For Construction Industry worksites that close before a follow-up investigation can be conducted, at least one of the employer’s other worksites will be inspected.
  • Nationwide Inspections. Where the agency has reason to believe that a citation is part of a broader pattern of noncompliance, OSHA will conduct inspections at related worksites of that employer.
  • Egregious Violations. All “egregious” enforcement actions—cases where OSHA has alleged instance-by-instance violations of a particular standard—will be considered SVEP cases…

…while OSHA has not announced an implementation date for the SVEP, employers should take the time now, before its implementation, to audit their safety programs to ensure that they are not identified as repeat offenders under the program.

Employers should consider taking the following steps, among others, with counsel:

  • Audit recent citations to ensure (1) that steps to abate those violations have been completed, and (2) that similar problems do not exist in facilities that were not inspected. Employers that adopt a multi-facility curative process for violations, rather than instituting a site-specific, temporary “fix,” may be less likely to receive further citations under the SVEP.
  • Identify worksites with High-Emphasis Hazards and/or PSM hazards, and audit safety practices against OSHA’s NEPs in these areas. These areas of emphasis—from falls to combustible dust hazards—encompass a wide-ranging target group for OSHA enforcement moving forward. These are particularly vulnerable areas for employers, because the hazards themselves are often difficult to identify and abate from a safety perspective…
With the recent catastrophes in the mining and offshore oil industries, companies should expect OSHA to move swiftly and firmly with their new enforcement program.

Coal Ash May Become Regulated as Hazardous Waste

The environmental newsletter of the Association of General Contractors (AGC) sheds some light on the status of EPA’s developing regulation of coal ash or coal combustion products (CCP).  The newsletter indicated that

the agency expects to release a rulemaking on coal combustion residuals (or waste) in April 2010, with a hazardous designation reported likely.

CCP has been exempted from regulation as a hazardous waste through an interpretation of existing hazardous waste law.  Under that interpretation, coal ash was “pardoned” as part of the “Bevill Amendment” – a 1980 amendment to the federal waste management legistration that excluded from regulation certain mining and mineral processing waste.  The amendment also mandated that EPA conduct a study to determine how to manage CCP.

The study was completed and the findings were presented to Congress in 1988 and again in 1999 – both times, EPA recommended that CCP not be regulated as hazardous waste.  Two regulatory determinations were subsequently published – one in 1993 and one in 2000, both again affirming that regulation of CCP as hazardous waste was not warranted.

Although EPA has not yet released its proposed regulation, AGC’s article stated that

sources indicate that EPA is strongly favoring a hazardous waste designation in order to establish standard and federally enforceable practices.

In addition to creating significant direct waste management costs to CCP generators, a hazardous waste designation for CCP would have a detrimental impact on CCP reuse.  CCP-based materials would likely create the potential for third-party liabilities in addition to the costs/questions associated with regulatory compliance.

More New of the Same Old

EPA announced two more major Clean Air Act enforcement settlements today that stemmed from the Agency’s long-standing industry New Source Review (NSR) enforcement initiatives.

Saint-Gobain Containers, Inc. of Muncie, Ind. agreed to install pollution control equipment at an estimated cost of $112 million to reduce emissions of NOx, SO2, and PM by approximately 6,000 tons each year. The settlement covers 15 plants in 13 states. This is the federal government’s first nationwide Clean Air Act settlement with a glass manufacturer that covers all of a company’s plants.  In addition, as part of the settlement, Saint-Gobain has agreed to pay a $2.25 million civil penalty.

Lafarge North America, Inc., based in Herndon, Va., and two of its subsidiaries agreed to install and implement control technologies at an expected cost of up to $170 million to reduce emissions of NOx by more than 9,000 tons each year and SO2 by more than 26,000 tons per year at their cement plants.  In addition, as part of the settlement, Lafarge has agreed to pay a $5 million civil penalty.

Companies potentially on EPA’s NSR radar screen should review their environmental audit programs to evaluate how critically the programs evaluate plant changes that could trigger this enforcement.  With the capital cost at stake, investing a small amount in a program review may generate a significant return in the event of NSR enforcement.

EPA Says Happy Holidays in Their Own Way

In case you haven’t yet seen it, EPA wrapped up the year with three significant announcements.

First, the Agency published its 2009 compliance enforcement results.  The summary statistics are here.   A few points from their website

  • In fiscal year (FY) 2009, the Environmental Protection Agency’s enforcement and compliance program concluded civil and criminal enforcement actions requiring polluters to invest an estimated $5.4 billion to reduce pollution, clean up contaminated land and water, achieve compliance and fund environmentally beneficial projects. Civil and criminal defendants committed to reduce pollution by approximately 570 million pounds annually once all required controls are fully implemented.
  • Approximately 57% of pollution reductions and 71% of pollution control investments obtained through the Agency’s FY 2009 enforcement actions focused on water and air pollution priority problems.
  • In FY 2009, EPA opened 387 new environmental crime cases, the largest number of criminal case initiations in five years.

Second, EPA announced it has settled with Duke Energy to resolve violations of the Clean Air Act’s new source review requirements found at the company’s Gallagher coal-fired power plant in New Albany, Ind., located directly across the Ohio River from Louisville, Ky.   The lawsuit was filed in 1999.

Under the settlement, Duke will spend approximately $85 million to reduce air pollution at the plant through a combination of fuel switching and air pollution control equipment, $1.75 million on the civil penalty, and another $6.25 million on environmental mitigation projects.

The Duke settlement is the 17th settlement secured by EPA and DOJ as part of a national enforcement initiative targeting coal-fired power plants under the Clean Air Act’s New Source Review requirements.  See the press release.

Lastly, EPA announced it is delaying a decision on the regulatory determination for coal ash.  No timeframe or deadline was offered by EPA.  Read the press release.

More EPA Compliance Enforcement is on the Way

The U.S. Environmental Protection Agency Administrator Lisa P. Jackson announced that the agency is stepping up its efforts on Clean Water Act enforcement.

The plan announced outlines how the agency will strengthen the way it addresses the water pollution challenges of this century.  These challenges include pollution caused by numerous, dispersed sources, such as concentrated animal feeding operations, sewer overflows, contaminated water that flows from industrial facilities, construction sites, and runoff from urban streets.

The goals of the plan are to target enforcement to the most significant pollution problems, improve transparency and accountability by providing the public with access to better data on the water quality in their communities, and strengthen enforcement performance at the state and federal levels.

Elements of the plan include the following:

  • Develop more comprehensive approaches to ensure enforcement is targeted to the most serious violations and the most significant sources of pollution.
  • Work with states to ensure greater consistency throughout the country with respect to compliance and water quality.  Ensure that states are issuing protective permits and taking enforcement to achieve compliance and remove economic incentives to violate the law.
  • Use 21st century information technology to collect, analyze and use information in new, more efficient ways and to make that information readily accessible to the public.

More information on the plan: http://www.epa.gov/compliance/civil/cwa/cwaenfplan.html

Identifying and correcting potential compliance issues ahead of EPA’s actions would likely prove a wise use of resources given the current enforcement/penalty trends.

2009: So Far, A Big Year for USEPA Enforcement Penalties

As EHS audit programs have matured over the past 25 years, most companies that have established such programs have generally achieved the desired goal of reduced violations and financial penalties.  But in the current economic climate, companies have been looking at all costs and their justifications.  EHS audit activities are also under the microscope.  The reduction in noncompliance costs over time – a good thing – can sometimes trigger questions from senior management about what value EHS auditing is creating NOW – a bad thing.

Answering such questions adequately depends on the individual company, but the threat of future violations (which are more likely to occur without corporate compliance oversight/auditing/reporting activities) is a common thread.  Elm took a look back at USEPA’s enforcement announcements thus far in 2009 to see if any notable trends could be identified.

Our review was not exhaustive and was limited to publicly available information on federal EPA activities.  But there is no question that EPA’s 2009 data clearly show aggressive enforcement involving many multi-million dollar settlements.  This summary information may be useful to those EHS audit programs that use enforcement data as an economic risk/value factor in rationalizing the continuation of audit activities.

–       Oct. 5 – Mosaic Fertilizer will spend approximately $30 million on air pollution controls and will also pay a civil penalty of $2.4 million to resolve alleged Clean Air Act violations

–       Oct. 3 – A federal judge fined Southern Union Gas $18 million for illegally storing mercury at a company-owned site in Pawtucket, R.I.  The penalty involves a $6 million criminal fine and $12 million in fines.  This case is also notable due to the third-party vandalism that resulted in spreading the mercury beyond Southern Union’s property.

–       Aug. 14 – A pipeline company and two of its former operating firms will jointly pay a civil penalty of $3.65 million to resolve violations of the Clean Water Act resulting from anhydrous ammonia spills. Magellan Ammonia Pipeline, of Tulsa, Okla.; Enterprise Products Operating, of Houston, Texas; and Mid-America Pipeline Company, also known as MAPCO, also of Houston, agreed to the settlement.

–       Aug. 4 – Aleris International Inc. and 13 of its subsidiaries have committed to implementing environmental improvements and controls projected to cost $4.2 million at 15 plants located in 11 states. The company also agreed to a $4.6 million civil penalty to resolve violations of the Clean Air Act, which will be allowed as an unsecured claim in Aleris’s bankruptcy proceeding pending in Delaware.

–       July 31 – The former and current owners and operators of a chemical facility in Addyston, Ohio, LANXESS Corp. and INEOS ABS USA Corp., agreed to pay a $3.1 million civil penalty and INEOS will spend up to $2 million to install environmental controls and modify operating procedures to resolve violations of multiple environmental laws.

–       May 7 – Anadarko Petroleum Co., and two related oil production companies agreed to pay a civil penalty of more than $1 million and implement injunctive relief, develop facility response plans, and revise spill prevention as well as containment plans at a cost of more than $8 million during the term of the settlement in order to resolve violations of the Clean Water Act.  Anadarko, Howell Corp., and Howell Petroleum Corp., agreed to pay $1.05 million and will upgrade and implement appropriate spill prevention plans and develop and implement facility response plans. The consent decree also requires the companies to implement a multi-phased integrity and mitigation plan that incorporates inspection, monitoring, testing, data collection and failure analysis activities.

–       Apr. 20 – DuPont and Lucite International Inc. agreed to pay a $2 million civil penalty to settle Clean Air Act violations at a sulfuric acid plant in Belle, W. Va. Further, the companies chose on their own to shut down the sulfuric-acid manufacturing unit of a larger chemical facility at the site by April 1, 2010.

–       April 13 – Invista will pay a $1.7 million civil penalty and spend up to an estimated $500 million to correct self-reported environmental violations discovered at facilities in seven states.  The company disclosed more than 680 violations of water, air, hazardous waste, emergency planning and preparedness, and pesticide regulations to EPA after auditing 12 facilities it acquired from DuPont in 2004.

–       Feb. 19 – BP Products North America Inc. agreed to spend more than $161 million on pollution controls, enhanced maintenance and monitoring, and improved internal management practices to resolve Clean Air Act violations at its Texas City, Texas refinery.  The company will also pay a $12 million civil penalty and spend $6 million on a supplemental project to reduce air pollution in Texas City.

–       Feb. 10 – Two petroleum refiners agreed in separate settlements to spend a total of more than $141 million in new air pollution controls at three refineries in Kansas and Wyoming. Frontier Refining and Frontier El Dorado Refining (Frontier) agreed to pay a civil penalty of $1.23 million and spend approximately $127 million in pollution control upgrades for alleged violations at its refineries in Cheyenne, Wyo. and El Dorado, Kan. Wyoming Refining Co. (WRC) agreed to pay a civil penalty of $150,000 and spend approximately $14 million in similar upgrades for alleged violations at its Newcastle, Wyo. refinery.

–       Feb. 5 – Patriot Coal Corporation agreed to pay a $6.5 million civil penalty to settle violations of the Clean Water Act.  The settlement includes the third largest penalty ever paid in a federal Clean Water Act case for discharge permit violations.

–       Feb. 3 – Kentucky Utilities (KU), a coal-fired electric utility, agreed to pay a $1.4 million civil penalty and spend approximately $135 million on pollution controls to resolve violations of the Clean Air Act.

–       Jan. 15 –  CEMEX California Cement LLC paid a $2 million civil penalty for emissions violations at the company’s Victorville, Calif., Portland cement plant.  The plant also is spending millions of dollars on new air pollution control equipment.

–       Jan. 12 – Three manufacturers of sulfuric acid agreed to spend at least $12 million on air pollution controls at six production plants in Louisiana, Ohio, Oklahoma, Texas, and the Wind River Reservation in Wyoming. Chemtrade Logistics, Chemtrade Refinery Services, and Marsulex also will pay a civil penalty of $700,000 under the Clean Air Act settlement.

–       Jan. 8 – The Explorer Pipeline Company agreed to pay a $3.3 million civil penalty in order to resolve an alleged violation of the Clean Water Act stemming from a spill of jet fuel from its interstate pipeline at a location near Huntsville, Texas.