Transcript EPA Enforcement Priorities and Trends

Environmental
Compliance and
Sustainability in the
Retail Industry
Sean M. Sullivan
Williams Mullen
301 Fayetteville Street, Suite 1700
Raleigh, NC 27601
(919) 981-4312
[email protected]
Major Topics
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EPA Enforcement Priorities and Trends
Considerations for Compliance Auditing
Vapor Intrusion at Brownfields Sites
Disaster Planning
Sustainability In Retail
EPA Enforcement Priorities and
Trends
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Stormwater
Hazardous Air Pollutants
Underground Storage Tanks
Hazardous Waste Issues
Recent Enforcement Cases involving
Retailers
EPA Enforcement Priorities and
Trends
• EPA’s Nationwide Priorities for FY 20102013 include:
– Stormwater compliance (construction
and industrial).
– Emissions of air pollutants from boilers
and generators.
– Underground Storage Tanks.
EPA Enforcement Priorities and
Trends
• Stormwater Compliance
– Construction sites continue to be a high
priority for EPA.
– Depending on the structure of a
development transaction, anchor stores
may find themselves as permittees for
stormwater discharges.
• The owner of a construction site is
usually the target of enforcement.
EPA Enforcement Priorities and
Trends
• Stormwater Compliance
– Can be a major source of pass through
costs in leases.
• In NC, DENR has proposed rules that
require commercial developments to
retrofit pollution controls due to water
quality problems in a Raleigh lake.
• Landlords may be able assess tenants
for those costs.
EPA Enforcement Priorities and
Trends
• Stormwater Compliance
– In Chesapeake Bay Watershed, state
and local governments will be forced to
install additional controls and meet
stricter discharge limits.
• Higher utility fees and taxes.
• Local governments may also impose
additional regulations to meet these
stricter limits.
EPA Enforcement Priorities and
Trends
• Hazardous Air Pollutants
– EPA issued new emissions rules for industrial
and commercial boilers in early 2011.
• Apply to both major and minor sources of
HAP emissions.
• Operators of heating boilers (for example)
have varying compliance obligations based
on:
– Type of fuel source
– Whether they emit more than 10 tpy of
any one HAP or 25 tpy of all HAPs.
EPA Enforcement Priorities and
Trends
• Hazardous Air Pollutants
– Generators
• All “non-emergency” generators are regulated.
• Emergency generators installed after June 12,
2006 are regulated.
• Emissions and fuel limits, records, notifications.
• Generators can become non-emergency if:
– New generator is used for demand management
or is part of a financial arrangement with a third
party.
– Existing generator runs > 15 hours per year for
demand management or demand shaving deal.
EPA Enforcement Priorities and
Trends
• Underground Storage Tanks
– Not only an issue for retail operations but also
for distribution centers.
– Leak detection, recordkeeping and reporting of
potential releases are primary requirements.
• Have had several cases where maintenance staff
ignore a faulty sensor because others are working or
ignore release alarms because other parts of system
indicate no release has occurred.
• You have to fix the faulty sensor or resolve the
source of the release alarm, or it’s a violation.
• EPA hits parties hard for not reporting failed leak
detection tests.
EPA Enforcement Priorities and
Trends
• Hazardous Waste Issues
– Pesticides, paint, batteries and fluorescent light
bulbs are all hazardous waste when disposed
or sent for recycling.
– Some of this material must be managed as
hazardous waste and some can be managed
as universal waste.
• Standard procedures are an easy way to
ensure these materials are handled
properly.
EPA Enforcement Priorities and
Trends
• Hazardous Waste Issues
– Procedures should not be too generalized.
• Had a case where a client treated any spill of any
material with an MSDS as hazardous waste.
• Changed some operations at a distribution center
and had a number of spills in one month.
• Between the normal amount of hazardous waste
generated, they crossed the LQG threshold one
month.
• Had an inspector come through a month later and
the facility was not in compliance with LQG rules.
• Could have avoided the violations by not treating
absorbents as hazardous waste automatically.
EPA Enforcement Priorities and
Trends
• Federal Enforcement Data
– Available in the ECHO database.
– Trends over the last five years
• A number of retailers were caught in the silly string
cases.
• Numerous retailers have had generator-status
violations
• UST violations for gasoline sales, retail distribution
centers, and generator fuel.
• Failure to have and comply with Spill Prevention
Control and Countermeasures Plans.
• Construction stormwater enforcement cases.
EPA Enforcement Priorities and
Trends
• Interesting Individual Enforcement Cases
– Operation of large capacity cesspools in
Hawaii.
• Highlights risks in relying on state guidance.
– Releases of hydraulic fluid containing PCBs
from a shopping mall elevator.
• Neither retailer nor mall owner cleaned up known
spills of fluid.
– Failure to repair known refrigerant leaks at
retailer’s corporate offices (multiple locations).
• Violations can occur anywhere.
EPA Enforcement Priorities and
Trends
• Pesticide / Product Labeling Issues
– If a product’s labeling claims to control pests, it
must be registered as a pesticide.
– Distribution of an unregistered pesticide in
commerce is a violation of FIFRA, and
enforcement actions against retailers are
common.
• Situation also forces retailers to remove large
quantities of merchandise from shelves.
– Recent example is mold and mildew cases.
EPA Enforcement Priorities and
Trends
• Mold and Mildew Cases
– Critical question is whether the product
claims the ability to control a living
organism.
– Claim to prevent “mold and mildew” can
only be made for registered pesticide.
• Safeway paid a $600K civil penalty for
this type of claim on its house brand
toilet bowl cleaner.
EPA Enforcement Priorities and
Trends
• Mold and Mildew Cases
– Compare Safeway claim to:
• Claim to prevent mold and mildew
stains.
• Claim to clean and remove mold and
mildew stains.
• Claim to prevent tough odors.
• EPA has a fact sheet for cleaning
products on its website.
Major Topics
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EPA Enforcement Priorities and Trends
Considerations for Compliance Auditing
Vapor Intrusion at Brownfields Sites
Disaster Planning
Sustainability In Retail
Considerations for Compliance
Auditing
• Basic Truth – EPA does not recognize any
“audit privilege” created by state law.
– Audit reports will be admissible as evidence in
any federal proceeding.
• Exception – Attorney-client privilege and
attorney work product doctrines.
– If a consultant prepares the report in order to
allow an attorney to provide legal advice, the
report is protected from disclosure.
Considerations for Compliance
Auditing
• Running compliance audits through
internal law departments provides a
cost effective means of keeping reports
confidential.
• Select an attorney whose role in the
company is clearly legal.
– To the extent a lawyer functions in a business
role, there is an argument no privilege exists.
– Using outside counsel eliminates this risk.
Considerations for Compliance
Auditing
• Maintain the confidentiality of
compliance audit reports.
– Limit availability in document
management system and distribution
among employees.
– Extent of permissible distribution varies.
– Disclosure during transactional due
diligence can waive privilege.
Major Topics
•
•
•
•
•
EPA Enforcement Priorities and Trends
Considerations for Compliance Auditing
Vapor Intrusion at Brownfields Sites
Disaster Planning
Sustainability In Retail
Vapor Intrusion at Brownfields
Sites
• Trend towards urban redevelopment
commonly involves sites with
environmental contamination.
• Certain types of groundwater
contaminants produce gas that rises
through the soil to the surface.
– Typically chlorinated solvents, dry-cleaning
chemicals and gasoline.
– Result is indoor air quality problems.
Vapor Intrusion at Brownfields
Sites
• Many states follow EPA’s 2002
guidance on vapor intrusion.
– Lays out a multi-tiered process for
evaluating whether groundwater
contamination poses a vapor risk.
– Depending on site-specific factors, soil
gas sampling and then indoor air
sampling may be warranted.
Vapor Intrusion at Brownfields
Sites
• States are finding that the screening levels
in the 2002 guidance are not conservative
enough.
– Reopening closed sites to evaluate human
health risk.
– NC has initiated a fundamental re-evaluation of
its vapor intrusion program.
• Immediate indoor air sampling is not a
good idea, though.
– Soil gas sampling is the better approach.
Major Topics
•
•
•
•
•
EPA Enforcement Priorities and Trends
Considerations for Compliance Auditing
Vapor Intrusion at Brownfields Sites
Disaster Planning
Sustainability In Retail
Disaster Planning
• Has been an issue recently in North
Carolina with the tornado outbreak.
• Environmental issue is disposal of
materials in a store that are damaged or
destroyed.
• Two major concerns:
– Products.
– Building and its fixtures.
Disaster Planning
• Product Disposal
– Examples – Pesticides, paint, CFL light
bulbs.
– If these materials are in an area that’s
unsafe to enter, building demo may
cause releases.
– Depending on store configuration,
spilled materials can enter storm drains
and be released to surface waters.
Disaster Planning
• Building and Fixture Disposal
– Fluorescent lighting.
– Older buildings with asbestos.
– Lead-based paint.
• Regulatory problem – the mixture rule.
– Rule – if one mixes hazardous waste
with non-hazardous waste, the entire
mixture is now hazardous waste.
Disaster Planning
• Mixture Rule Problem
– Application of the rule is within the
state’s regulatory agency’s discretion.
– Key is convincing the regulator you
have not intentionally mixed hazardous
and non-hazardous waste.
• Minimize the potential for additional
releases after the event has concluded.
Disaster Planning
• There are a number of studies
regarding debris disposal after Katrina.
• As a result, EPA has directed states to
develop debris management plans,
which include staging areas for different
classes of materials.
• Private businesses are still responsible
for disposing of their own debris, but
understanding the local plan may help
facilitate disposal and rebuilding.
Disaster Planning
• Post-Katrina Enforcement Cases
– Improper disposal of asbestos.
– Dumping of materials in unpermitted
locations.
– Improper management of fluorescent
light bulbs and ballasts.
• Key is understanding what you have in
your store and how it needs to be
managed ahead of time.
Major Topics
•
•
•
•
•
EPA Enforcement Priorities and Trends
Considerations for Compliance Auditing
Vapor Intrusion at Brownfields Sites
Disaster Planning
Sustainability In Retail
Sustainability in Retail
• EPA’s Definition of Sustainability – going
beyond your regulatory obligations to
protect the environment.
• Five Major Areas for Retail Industry
– Buildings and Infrastructure
– Facilities Management
– Transportation/Logistics/Supply Chain
– Merchandising (Packaging)
– Customer Programs
Sustainability in Retail
• Buildings and Infrastructure
– Advanced Refrigeration to avoid ozone
depleting substances.
• Benefit of avoiding regulatory requirements
under CAA, but ammonia-based systems
have their own rules.
– Building materials and designs that limit energy
use and use materials with lesser
environmental impact.
• Leases should be written to allocate savings
to entity that bears the cost.
Sustainability in Retail
• Smart Growth – use of brownfields
properties for new stores to reduce
sprawl.
• Green Infrastructure – design sites with
less impervious surfaces to reduce
pollutant loads on utilities and volume of
stormwater discharge.
Sustainability in Retail
• Facilities Management
– Selecting boilers with greater energy
efficiency ratings and potential for
cogeneration.
– Limit amount of fats, oil and grease you
discharge to sewer system.
– Landscaping to maximize pervious
surface and minimize need for fertilizer
and pesticide.
Sustainability in Retail
• Transportation and Supply Chain
– Encourage public transportation use
among employees.
– Alternative fuels for fleet vehicles.
Sustainability in Retail
• Merchandising
– Life Cycle Analysis – concept of
evaluating the entire life of a product
(from manufacture to ultimate disposal).
• Identify products with lower carbon
footprint.
• Select offerings that limit use of
hazardous chemicals during production.
Sustainability in Retail
• Merchandising
– Packaging
• Activist shareholder groups have been
advocating shareholder resolutions to stop
retailers from using PVC-based packaging.
• Problem of plastic bags.
– Supply Chain Management
• Selecting products whose life cycles have
less environmental impact.
• Problem of enforcement of vendor contracts
(ex – Silly String Cases)
Sustainability in Retail
• Supply Chain Management
– Lacey Act Amendments of 2008
• Prohibits the import or distribution in
commerce of any plant harvested in
violation of federal, state or foreign law.
• Also applies to certain products
containing plants; phased in over time.
• Again, the problem of controlling the
sources of raw materials and enforcing
contractual provisions.
Sustainability in Retail
• Consumer Programs
– E-Waste
• 20 States currently have programs requiring
recycling of this material.
• Hazardous substances in electronics include: lead,
cadmium, lithium, nickel
• Examples
– California treats it as state-only hazardous waste
– North Carolina requires manufacturers to
establish recycling programs.
• Retailers can establish collection programs for
their customers.
Contact Information
Sean M. Sullivan
Williams Mullen
301 Fayetteville Street, Suite 1700
Raleigh, NC 27601
(919) 981-4312
[email protected]