Review Your Environmental, Health and Safety Management Systems to Minimize Regulatory Enforcement Risks Post-Quarantine
On March 26, 2020, as government officials issued a slew of stay-at-home orders, the U.S. Environmental Protection Agency (EPA) published an emergency policy memorandum describing how the agency would exercise its enforcement discretion during the COVID-19 crisis.1 In that memorandum, the EPA acknowledged that travel and social distancing restrictions posed challenges to corporate environmental compliance, asserting that, even if employees were able to go to work, companies would have to implement protective practices that could affect their compliance programs. The EPA thus stated that it would exercise its discretion to not seek civil penalties for noncompliance with routine compliance monitoring and reporting requirements for regulated entities. This use of enforcement discretion is expressly conditioned on adherence to several general conditions, including a showing that noncompliance is due to COVID-related circumstances.2 As we reported earlier, this decision was a reasonable response to the extraordinary uncertainty brought on by early quarantine orders and is not a blank check to ignore environmental compliance obligations.
The EPA’s decision provided relief from a limited set of compliance obligations as the United States slid into a patchwork of state and local quarantine measures, as well as workforce and operational disruptions. But not everyone agreed that relief was warranted. Groups across the country—including nine state governments—pressed the EPA to reconsider or abandon its statement of policy.3 At the same time, many companies found ways to address the challenges brought on by travel restrictions and social distancing.4 The EPA recently issued a follow-up statement noting that the March memorandum will terminate on August 31, 2020.5
Businesses—even those that do not make use of the EPA’s COVID-19 enforcement policy—should take this opportunity to review their environmental compliance policies and the overall effectiveness of their environmental, health and safety (EHS) management systems. COVID-19 has upset many routine corporate practices, including environmental protocols, and may have also resulted in the loss of key EHS personnel. As such, even businesses with robust compliance programs could benefit from an assessment of how these programs have been implemented during the pandemic.
Reviewing Environmental Practices
There are a range of proactive steps that can be taken to shore up corporate environmental protocols. Given the challenges that COVID-19 has posed to the business community, even companies with a history of successful environmental compliance should consider taking proactive steps to minimize potential enforcement risk or reputational risk that might result from any gaps in environmental compliance that arose during the past few months.
For companies that already had environmental compliance programs in place, returning to pre-COVID compliance practices will likely be a simple process, depending on the extent of changes made as a result of COVID-19. First and foremost, companies should take the time to re-emphasize the importance of their environmental policies to their workforces. Many companies, even those deemed “essential,” have had to ask many of their workers to stay home during the pandemic. As employees begin to return to work, companies could lower their enforcement risk and minimize disruptions to operations by stressing to employees that understanding and implementing environmental compliance protocols are a part of the company’s overall success.
Environmental laws and regulations are highly technical and complex, and ramping operations back up to pre-COVID-quarantine levels may provide useful opportunities to close potential environmental compliance gaps even among the most sophisticated of regulated entities. For example, a 2016 survey of 100 managers and maintenance professionals at various petrochemical refining facilities found that only a small number conducted regular internal training on pollution control.6 Moreover, nearly 40% of respondents were unable to recall what percentage of their operating budget was devoted to pollution control. There was one environmental policy, however, that these plant managers were keenly aware of: the removal of oil from water.7 The report states that this is likely due to the fact that removing oil from water reduces operating costs through savings on labor, maintenance, and increased regulatory compliance.8 The survey respondents were able to easily recall the operational details of this practice—likely because they had a clear understanding of the non-compliance related benefits it yields. Companies should heed this lesson and utilize any return to routine (or close to routine) operations as an opportunity to bolster existing corporate environmental training and compliance programs and underscore how compliance also plays a critical role with respect to operational success. Many employees, emerging from the haze and distractions of shifting quarantine orders and societal unrest, could likely use such a reminder.
Companies should also identify those employees who are key to the success of their environmental policies. As economic disruptions resulting from COVID-19 and volatile commodities markets force many companies to evaluate potential workforce reductions, there is increased risk of the loss of critical institutional knowledge that typically helps ensure the smooth implementation of corporate environmental compliance programs. Many companies rely on employees who require special training to carry out their jobs, but even in the best economic times, it can be hard to find people licensed for these positions.9 As enforcement returns to normal (and potentially surges as EPA enforcement staff begin to return to their offices), these key employees and the roles that they play become ever-more critical to minimizing enforcement risks. Doubtlessly, some businesses will be forced to let go of EHS workers in the coming months; businesses in that situation should consider developing an action plan that can be swiftly and easily put in place in case there are unforeseen compliance violations. For instance, businesses may want to line up potential consultants or outside counsel that they can quickly turn to when difficulties arise.
In addition to reviewing retention policies for EHS workers, businesses should consider devoting additional resources to develop, formalize, and publish environmental compliance protocols applicable to their current EHS teams. In the event that some EHS staff are let go, having these policies clearly laid out can help ensure continued compliance and avoid unnecessary time and expense spent redeveloping these policies. At a minimum, businesses should have a system in place that provides consistency for the collection, recording, and reporting on the following objectives:
- Act responsibly under the circumstances in order to minimize the effects and duration of any noncompliance caused by COVID-19;
- Identify the specific nature and dates of the noncompliance;
- Detail how COVID-19 was the cause of the noncompliance, and the decisions and actions taken in response, including best efforts to comply and steps taken to come into compliance at the earliest opportunity;
- Return to compliance as soon as possible; and
- Document the information, action, or condition specified in (a) through (d).
Taking these steps before the potential loss of EHS personnel will help minimize the risk of an easily avoidable enforcement action as companies adjust to post-quarantine economic realities.
How a regulated entity chooses to evaluate its pre- and post-COVID environmental compliance practices raises a number of legal issues that require careful consideration. In particular, the patchwork of state-by-state responses to the EPA’s enforcement discretion policy is likely to raise a variety of unique legal questions. As the EPA retains the power to extend the deadline on this policy past August 31, many regulated entities will continue to face uncertainty around their compliance-related responsibilities. Companies that have experienced severe disruptions to their environmental compliance protocols should consider using their internal legal departments or outside counsel to lead any investigations into these disruptions to ensure that the findings are protected by privilege. In addition, there are a number of federal and state environmental compliance audit laws, regulations, and policies that allow for enforcement relief following self-disclosure of potential environmental compliance issues. Companies assessing their EHS management systems in light of COVID-related disruptions can use these tools to minimize environmental risks.
Please visit our Coronavirus: Preparation & Response series for additional resources we hope will be helpful.
1 U.S. Environmental Protection Agency, COVID-19 Implications for EPA’s Enforcement and Compliance Assurance Program, Mar. 26, 2020, https://www.epa.gov/sites/production/files/2020-03/documents/oecamemoon
2 Id. Do note that corporate criminal liability remains unaffected by the order.
3 Steve Stroth and Peter Blumberg, States Sue Trump’s EPA Over Rule Relaxation During Pandemic, May 13, 2020, https://news.bloomberglaw.com/environment-and-energy/states-sue-trumps-epa-over-rule-relaxation-during-pandemic-1.
4 U.S. Environmental Protection Agency, COVID-19 Implications for EPA’s Enforcement and Compliance Assurance Program: Addendum on Termination, June 29, 2020, https://www.epa.gov/sites/production/files/2020-06/documents/covid19addendumontermination.pdf.
5 Clay Master, Utilities Aim To Keep Specially Trained Employees Healthy And Working, Mar. 31, 2020, https://www.npr.org/2020/03/31/824358200/utilities-aim-to-keep-specially-trained-employees-healthy-and-working.
6 Abanaki, Survey Reveals Companies Give Low Priority to Pollution Control, 2016, https://info.abanaki.com/survey-white-paper-request.
9 See supra, note 6.
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.