24 ELR 10305 -- A Practical Guide to Surviving Multimedia Inspections

A Practical Guide to Surviving Multimedia Inspections

Carol Barry

Editor's Summary: Facility owners and operators that have become accustomed to environmental regulatory inspections that focus on a single medium are in for a change. EPA is placing greater emphasis on conducting multimedia inspections. This new focus requires that facilities be better prepared in order to minimize potential penalties. Focusing on potential RCRA, FWPCA, and CAA violations, this Article provides background on multimedia inspections and suggests steps that facility owners and operators can take to enhance their chances of safely surviving a multimedia inspection. The Article introduces and explains various strategies that can be employed before, during, and after a multimedia inspection for the purpose of reducing anxiety and the likelihood of incurring significant penalties.

Carol Barry is assistant counsel in the Illinois Environmental Protection Agency (IEPA) in Springfield, IL. In addition to her J.D. she has a B.S. in chemical engineering. The views expressed here are her own and do not necessarily represent those of the IEPA. Ms. Barry thanks Dan Merriman for his assistance.

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Introduction

The U.S. Environmental Protection Agency's (EPA's) current Administrator, Carol Browner, has ranked multimedia enforcement within the top three priorities of her administration. In light of the government's use of environmental regulatory inspections to monitor facility compliance, EPA's new focus suggests that facility operators¹ be prepared for [24 ELR 10306] multimedia inspections. No longer can they assume that agency regulators representing one environmental medium or program will overlook facility discharges of pollutants that affect other media; nor can they expect piecemeal inspections that in the past, have made it possible for operators to draw attention away from a problem area just long enough to implement a quick fix.² Instead cross-media trained inspectors that are capable of conducting coordinated inspections of facility processes that are subject to regulation will arrive at facilities with fine-toothed combs firmly in hand.

Environmental regulatory inspections of facilities permit the government to ascertain facility compliance with applicable environmental laws, regulations, administrative orders, court orders, and permits. These inspections look for existing violations, identify potential future violations, and monitor compliance and corrective action. They often are conducted as evidence gathering exercises to support planned or pending enforcement actions.

In the past, environmental inspections typically were regulation-or program-specific evaluations of facility compliance. Occasionally facilities holding permits in more than one media were subject to a "multimedia" inspection, but this rarely involved more than two separate, simultaneous program inspections by inspectors representing different media and sharing little more than common transportation to the facility.

Before succumbing to apocalyptic visions of hoards of governmental investigators inspecting their facilities, facility owners and operators should examine practical steps they can take to minimize the trauma of a multimedia inspection. Although multimedia inspections are not easy to endure, advance planning should result in a positive payoff to operators in the form of minimal penalties and maximum peace of mind. This Article provides background on multimedia inspections and suggests some basic steps owners and operators can take to enhance their chances of safely surviving a multimedia inspection.

Participants

Successful planning for multimedia inspections requires knowledge of the participants. Knowing the players can help inspection preparations because past participant performance may, to some extent, allow the facility operator to anticipate problems and predict results.

Government Regulators

Because federal environmental legislation generally provides the framework for regulation affecting industry, one might consider that EPA would be the lead environmental enforcement and inspection organization. Due to the proliferation of federal legislation that delegates to states authority to implement programs and cooperative grants pursuant to state laws and regulations,³ however, most regulated entities deal more often with state and local regulatory inspectors than with the federal government. Although many states have taken advantage of this opportunity, owners and operators should be aware that EPA's proposed emphasis on multimedia inspections may lead to increased federal involvement in both inspections and enforcement activities at regulated facilities.

[] Federal Participation. The federal government's participants in multimedia inspections usually include EPA regional office field inspectors trained in the relevant media, or inspectors who are multimedia cross-trained to serve in the regional offices' multimedia divisions. In the past, EPA's high-priority, or high-visibility, multimedia inspections have used the Agency's crack "environmental S.W.A.T. unit," the National Environmental Investigative Center (NEIC), located in Denver, Colorado. NEIC inspectors are highly trained and well-equipped, and NEIC has proposed uniform national multimedia inspection policies and procedures.⁴ Observers, however, have noted a "territorial" friction between NEIC inspectors and some of the regional office inspectors (similar to the perceived professional rivalry between local law enforcement officers and Federal Bureau of Investigation agents). This friction has resulted in occasional regional resistance to calling on the NEIC and to adopting NEIC's proposed inspection policies and procedures. Consequently, in most instances NEIC inspectors' limited resources have been devoted to environmental criminal investigations.

On July 22, 1993, Administrator Browner announced a reorganization and unification of EPA's enforcement functions⁵ that probably will enhance NEIC's national influence and position relative to the respective regional offices.⁶ The reorganization is intended to "… provid[e] the Agency a single voice on national enforcement priorities, and position [] the Agency to respond to cutting-edge issues."⁷ Centralization of EPA's enforcement functions should benefit NEIC's efforts to implement its proposed uniform procedures.

[] State Participation. A state-designated team leader or coordinator and state inspectors for each affected medium also may participate in the multimedia inspection. State agency counsel and possibly assistant attorneys general may be standing by. These attorneys may be more integrally involved before the inspection when agency officials suspect criminal violations or serious civil violations. Attorneys will help to plan the inspection, gather evidence, and spot issues that are likely to arise during the inspection.

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Industry

The regulated facility and its personnel play a major role in the multimedia inspection. Probable industry players include corporate (headquarters) environmental specialists, facility (local) environmental specialists, and management. Many facilities also will want their legal counsel standing by for emergency consultation. However, facilities should carefully weigh the potential advantages and relative risks of having legal counsel physically present during the multimedia inspection. Although multimedia inspections are potentially adversarial in nature, the presence of legal counsel may cause government inspectors to view the matter as definitely adversarial, antagonize the inspectors, and minimize the likelihood of amicable on-site resolution of disputed violations by causing inspectors to produce government legal counsel. Having counsel ready but not on site may provide many of the potential advantages without incurring the attendant risks.

Facility Access

A variety of environmental legislation authorizes the government to conduct inspections.⁸ When government inspectors arrive, facility personnel can either consent to their entry or deny them access. Facility personnel should carefully consider the benefits and ramifications of their choice.

Facility personnel will generally find that the balance tips in favor of granting access. The only potential advantage of denying access is that it provides a short window of opportunity for facility personnel to fix minor problems. On the other hand, denying access will probably lead inspectors to assume facility personnel have serious environmental problems to hide. Although facility personnel are within their rights when they state that they have nothing to hide and are simply exercising their right to request a warrant, this approach will undoubtedly increase the inspectors' level of scrutiny. Inspectors are suspicious by nature and have little respect for facilities that may be trying to buy time. While consenting to an inspection may lead to the discovery of more violations at the site, violations are more easily and amicably resolved after ready access than they are if inspectors believe the facility has something to hide. Moreover, denial of access may influence an inspector's view of the facility for years to come, which may result in more frequent and thorough inspections of the facility.

Scope of the Multimedia Inspection

The scrutiny involved in a typical single-media inspection may frighten even the most experienced environmental engineer. A multimedia inspection is even more intense. Therefore, determining who are the likely targets of inspections may help a company avoid becoming one and may relieve unnecessary anxiety.

Who Is Likely to Be Subject to Multimedia Inspections?

Each federal and state government agency has its own criteria for selecting facilities to inspect. The criteria include objective and subjective standards. The most important factors used to target facilities for multimedia inspections include:

1. compliance history -- does the facility have a history of past violations, numerous notices of violations, consent orders, or complaints;

2. contentious facility personnel -- has there been poor interpersonal relations between inspectors and facility personnel;

3. corporate reputation -- does one "black sheep" facility within a corporation represent the manner in which all facilities act within the corporation;

4. location -- is the facility located in an area of high public interest, such as a mostly pristine space or space that is the focus of environmental justice claims;

5. community opposition -- is the facility the focus of localized, emotionally charged public outcry; and

6. citizen complaints -- has the facility previously been the target of citizen complaints.

Government Procedures in Conducting Multimedia Inspections

After the government decides who will receive a multimedia inspection, it performs a thorough search of its own files on the facilities targeted. In preparing for multimedia inspections, the government reviews records from the different media -- air, water, and land. Among the most important documents reviewed are the reports required under the Emergency Planning and Community Right-to-Know Act (EPCRA):⁹ the Form R report¹⁰ and the Tier I or Tier II reports.¹¹

A facility's Form R report provides an overview of the toxic chemicals the facility released to air, water, and land during the prior calendar year.¹² Inspectors may be able to [24 ELR 10308] discern discrepancies in the report that indicate violations. For example, if a facility uses chemical solvent X and the Form R report claims that all of the solvent was released as fugitive emissions, inspectors may deduce that solvent X is being illegally disposed of because facilities usually generate some type of waste stream other than fugitive emissions.

Tier I or Tier II reports are due every March 1 for the prior calendar year. These reports list hazardous chemicals present at facilities over threshold levels, and more importantly permit the government to deduce the types of waste the facility should be generating. Generator biennial reports¹³ and manifests¹⁴ are used to determine whether the company is properly manifesting the waste that the government believes the company is shipping off site based on the facility's Form R and Tier I or Tier II reports.

In reviewing records, the government also notes late filings of statutorily required reports, failures to file, and reporting errors. After reviewing the government's records, the inspectors are ready to perform a site inspection.

The government plans on obtaining access to the facility either through the consent of the personnel or through a standard administrative inspection warrant modified to fit the facility. After gaining entry to the facility, a site inspection is usually performed to obtain direct evidence of the physical conditions of the site. An inspection of the on-site records follows. In the event inspectors are concerned that the facility's records may be altered or destroyed, the records inspection may precede the site inspection.

After reviewing the on-site records, inspectors may interview select personnel about process or compliance issues. At this point, the government knows the facility well enough to focus its questions on determining the types and extent of the violations. The interview process could easily become a custodial interrogation¹⁵ of the industry representatives. Custodial interrogations require that Miranda warnings be given to the individual being interviewed.¹⁶

Inspectors may take samples at any time, but frequently they do so after they obtain an overall view and understanding of the facility and its manufacturing operations. Inspectors may sample soils, wastewater effluent, storm water, containers of waste, transformers, or any other items at the facility. Because analytical laboratories can make mistakes in analyzing the samples, facility personnel should request splitting the samples with the government.

A multimedia inspection will cover the applicable areas of hazardous waste, discharges to air and surface water or groundwater, radioactive materials, underground storage tanks, public water supplies, pesticides, monitoring and reporting, planning, training, and inspection logs and plans. The reference points for its inspection of facility components will include the Resource Conservation and Recovery Act (RCRA), the Federal Water Pollution Control Act (FWPCA), the Clean Air Act (CAA), EPCRA, the Toxic Substances Control Act, and the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). This Article focuses on multimedia inspections involving RCRA, the FWPCA, and the CAA, because these statutes are the basis for a majority of violations discovered during a multimedia inspection.

Multimedia Inspections for RCRA Violations

The most common violations discovered at a facility involve RCRA.

Types of RCRA Violators

The government classifies RCRA violators into three categories: high priority, medium priority,¹⁷ and low priority.¹⁸ The type of violation,¹⁹ the diligence shown by the violator in remediating the violation, and the type of enforcement option that would achieve RCRA compliance in a timely manner determine the classification.

A high-priority RCRA violator is a RCRA-regulated entity that:

"has caused actual exposure or a substantial likelihood of exposure to hazardous waste or hazardous waste constituents;

is a chronic or recalcitrant violator (this may include some handlers who are regularly found to have many Class I violations or Class II violations);

deviates from the terms of a permit, order, or decree by not meeting the requirements in a timely manner and/or by failing to perform work as required by the terms of the permits, orders, or decrees; or

substantially deviates from RCRA statutory or regulatory requirements."²⁰

A majority of RCRA violations that cause a company to be deemed a high-priority violator are due to unpermitted treatment or storage of hazardous waste, particularly where there has been a gross deviation from regulations or problems were not corrected once the violator was notified. If the facility owner or operator is not already meeting the interim status or treatment, storage, and disposal regulations, the unpermitted hazardous waste unit will cause the operator to be subject to a laundry list of violations.²¹ Other violations sufficient to classify an entity as a high-priority violator include but are not limited to failure to obtain [24 ELR 10309] financial assurance²² and violation of facility-specific RCRA permit conditions.

Facilities involved in high-priority violations can expect to be prosecuted. Although government agencies have prosecutorial discretion, states have incentive to enforce against high-priority violations because states that do not may jeopardize their federal grants. Therefore, aside from trying to avoid all violations, facilities should avoid high-priority violations altogether or do what they can to reduce violations that may cause them to be classified as high-priority violators in order that they be considered lower level violators.²³

Common RCRA Permit Violations

In setting the regulatory requirements for generators,²⁴ EPA distinguished between large-quantity generators, small-quantity generators, and conditionally exempt small-quantity generators. Generally, large-quantity generators are subject to more stringent requirements than are the other two classes of generators.²⁵

As long as large-quantity generators that store waste satisfy a two-pronged test, they are exempt from the regulatory and statutory requirements of obtaining a RCRA storage permit.²⁶ Under the test, a large-quantity generator will lose this exemption if it accumulates more than 55 gallons of hazardous waste or one quart of acutely hazardous waste at its facility for more than 90 days.²⁷ Many industry representatives mistakenly believe that a generator must only avoid exceeding such limits for hazardous waste accumulated over 90 days. But under the second prong of the test, a company must comply with safe-storage conditions.²⁸ A large-quantity generator cannot rely on the RCRA permit exemption of 40 C.F.R. § 262.34 as a defense if it stores hazardous waste for any period of time in violation of any conditions listed in 40 C.F.R. § 262.34(a) or any equivalent state regulation.²⁹ This means that a generator may not store hazardous waste in a surface impoundment because this method of storage is not a storage method that is listed under § 262.34(a), which would exempt the large-quantity generator. A company may only accumulate hazardous waste in containers, tanks, or on drippads.³⁰ Additionally, failure to close a container of hazardous waste or to label properly a container with the date of accumulation is enough to prevent the generator from establishing that the RCRA permit exemption applies.³¹

A small-quantity generator³² also may lose a RCRA permit exemption if it accumulates hazardous waste for more than 180 days (270 days if it must ship the waste further than 200 miles for treatment, storage, or disposal) or fails to meet the safe storage conditions.³³ Conditionally exempt small-quantity generators, the least regulated of the generators, may generate hazardous wastes that become subject to the more stringent regulations for small-quantity generators.³⁴ This occurs when the conditionally exempt small-quantity generator accumulates over 1,000 kilograms of hazardous waste on site. The practical effect is that conditionally exempt small-quantity generators are allowed to store hazardous waste for 180 days without interim status or a RCRA permit exception unless it fails to satisfy the safe storage conditions.

To prevent losing its RCRA exemption, large-quantity generators must follow all of the factors listed below. These generators should focus on the first five factors, however, because the government more frequently relies on these considerations to show that the RCRA permit exemption defense is inapplicable. Large-quantity generators should:

* store hazardous waste 90 days or less (facility personnel should quickly analyze any newly created waste because the analysis report may take four to eight weeks and the waste approval process may take four weeks or longer);

* mark clearly the words "hazardous waste" on the outside of containers, tanks, or drip pads that holds hazardous waste;

* place the date on which 55 gallons of hazardous waste is reached in a container, tank, or drip pad;

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* ensure that containers are in good condition³⁵ and are kept closed when waste is not being placed into them. Tanks must comply with 40 C.F.R. pt. 265, subpt. J;

* document thoroughly the hazardous waste inventory for drip pads;

* perform weekly inspections of accumulation areas;

* comply with all the preparedness and prevention requirements in 40 C.F.R. pt. 265 subpt. C;

-- as a rule of thumb, maintain 36 inches aisle space between double-rowed drums;

-- make arrangements with emergency response teams, i.e., police, hospitals, fire departments, etc.;

-- maintain proper emergency equipment at the site; and

-- maintain a communications or alarm system.

* develop and maintain a contingency plan;

-- make certain local emergency response agencies receive copies of the plan; and

-- ensure that an emergency coordinator is available at all times, with his or her name and telephone or pager number listed in the contingency plan.

* train personnel annually in hazardous waste management.

Small-quantity generators must follow the first three of these factors and some of the emergency response requirements. They also must not accumulate more than 6,000 kilograms of hazardous waste on site.³⁶ Conditionally exempt small-quantity generators do not have a RCRA permit exemption. In fact, they will not be required to have a permit unless the company becomes subject to more stringent regulations through its accumulation of one kilogram of acute hazardous waste or 100 kilograms of media contaminated with acute hazardous waste and a failure to comply with safe storage conditions.

Multimedia Inspections for FWPCA Violations

While the government typically detects RCRA violations during the multimedia inspection, it probably becomes aware of FWPCA violations before it inspects the facility. The government derives this knowledge from quarterly reports that summarize the facility's 24-hour continuous composite effluent sampling and analysis, which wastewater dischargers must submit to the government.³⁷ Simply stated, industry self-reports its excursions.³⁸ Because the analyses and quarterly reports that the facility's contract laboratory prepares are legal admissions, the government can anticipate bringing an enforcement action against the facility.

When the inspection is in full swing, the multimedia inspectors will focus on on-site physical observations and water sampling. They will look for dead or discolored vegetation, absence of fish or other types of aquatic life, and oily sheens or foamy material in the effluent, creek, or ditch that passes through the facility property. Unusual odors from chemical or biological activity also will be noted. The inspector may walk upstream and downstream of the ditches or creeks to determine the cause of any water problem. The inspectors also carefully review the wastewater treatment operation and determine whether the equipment is capable of handling the quantity of wastewater treated. Besides physical observations, the inspector probably will collect samples at the point where the effluent is discharged.

Because penalty determinations may be based on the frequency and magnitude of the excursions, as well as the causes for the violations, facilities need to be aware of circumstances that tend to lead to an enforcement action and possible mitigating factors in the event a penalty is assessed. Although there is no bright-line test to determine whether an FWPCA enforcement action will be brought against a facility, a significant factor is whether state agencies have failed to pursue significant excursions of permit parameters.³⁹ Where they have failed to do so, EPA may issue administrative orders or refer the violations to the U.S. Department of Justice (DOJ) for the purpose of filing a complaint. The extent of excursions is also an important factor. EPA determines the extent of excursions through its review of the frequency and magnitudes of excursions. The Agency finds large excursions suggestive of significant violations.

In addition, enforcement actions can be pursued regardless of whether a significant violation criterion is met. For example, facilities may find themselves the target of citizen suits. Facilities may be able to ward off potential citizen suits by preventing any continuous or ongoing excursions.⁴⁰

Multimedia Inspections for CAA Significant Violations

Significant violations under the CAA are usually detected during the multimedia inspection or when the company is trying to renew air permits. Typically EPA grants require state agencies to file enforcement actions against facilities that have significant air violations. These violations include Class A and B source violations for the pollutant for which the area is in nonattainment,⁴¹ failure to obtain a permit before construction,⁴² and violations of new source performance standards (NSPS),⁴³ prevention of significant deterioration requirements⁴⁴ or new source review requirements,⁴⁵ and national emission standards for hazardous air pollutants (NESHAPs).⁴⁶ [24 ELR 10311] Agencies also enforce cases involving permit violations⁴⁷ and emissions of criteria pollutants.

Once on site, multimedia inspectors will first check whether the control equipment is operating in accordance with applicable regulations, permit conditions, and design specifications. Inspectors will watch the control equipment in operation and try to detect any malfunctions. Because they will want to see equipment operating during a regular production operation, any equipment that the facility has shut down during production may be a tell-tale sign of problems.

Inspectors will review any operating reports that are required to be maintained at a facility in accordance with the state implementation plans, the NSPS, and NESHAPs. For example, a facility may be required to record the voltage used in a piece of control equipment such as an electrostatic precipitator. Review of the records can reveal violations. For instance, records that show an increased process weight rate may indicate that there are increased emissions over permitted levels because the control equipment may not have the capacity to capture the increased quantity of pollutant. Continuous emission monitoring reports⁴⁸ are also carefully reviewed. These will reveal permit or regulatory standard violations.

The inspectors will also check that each source is permitted. Finally, inspectors will give stack emissions a sensory check, observing their opacity and color and noting unusual odors.

Suggested Strategies for Dealing With the Multimedia Inspections

Facility owners and operators will find that advance preparation is the most important step in facing multimedia inspections. Although the strategies for dealing with the government in multimedia inspections rely mostly on common sense, a discussion of them will be useful for all, but especially those unfamiliar with the way government operates.

Before the Multimedia Inspection

The best strategy for surviving a multimedia inspection is preventing the major violations before they occur. This requires total quality management, which focuses on preventive measures rather than the detection of acts that do not comply with environmental regulations.

* Tickler System. Timely submission of statutorily required reports prevents violations and builds a good track record. Facilities that consistently fail to submit timely reports in one medium are usually submitting their reports after deadlines in other media. Aside from being indicative of facility violations, such tardiness leads to penalty assessments that are meant to encourage companies to reevaluate their priorities and submit their reports. Facilities would benefit from a tickler system that prompts them to submit the required environmental reports to the proper agency. This could be as simple as placing the due dates of environmental reports on a calendar. Facilities should also consider computer software or other more sophisticated calendar systems.

* Effective Training Programs. Proper training of personnel is key to preventing violations. Ineffective training programs cause the majority of violations. The violations are not usually a reflection of the employee who improperly manages an environmental problem at the facility, but rather of top management's lack of support for a training program. Too often a facility merely goes through the motions of training personnel for the purpose of documenting that training has been provided in the event its compliance with training requirements is questioned. The most basic form of training might involve gathering personnel into a room, showing them a video, and making them sign a training roster. This conveys the wrong message to personnel, and certainly to government inspectors as well.

More effective training programs are those that are supported by the facility's top management. Management demonstrates its support by providing the necessary time, equipment, and properly qualified trainer. The training sessions should be specifically tailored to the problems faced by each department in a facility.

Proper training alone, however, will not avert all violations. Preventing violations also requires good management. There are times when a properly trained employee decides not to comply with the environmental requirements. Good management will discipline this individual. In other instances, a properly trained employee may make an error. Depending on the severity and duration of the violation and the diligence shown by the facility, the government may exercise prosecutorial discretion against the company.

* Internal Multimedia Audits. Training programs and tickler systems will not prevent all violations. Consequently, facilities should consider periodic, internal multimedia inspections. To receive maximum benefit, these audits should be performed by experts in the particular medium. The auditors should come from the corporate headquarters or outside the company to allow for a "fresh look" at the site, and any problems that are discovered must be corrected as soon as practicable.

For two reasons, this simple type of audit may not produce the best results. First, facility personnel may not be forthright with the company's own auditors because of the natural competition that exists between the two separate organizations. Second, any nonconformance that is discovered may affect management's evaluation of facility personnel. Auditors can counter this problem by reviewing government records on the facility. Inspection reports are particularly useful because they can assist an auditor to focus on any past problems discovered by the government.

On the other hand, facilities should carefully consider whether to prepare an internal audit report, because the reports may not be protected from use by the government in an enforcement action.⁴⁹ However, companies can take steps to prevent the multimedia audit report from being disclosed to the government.

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The attorney-client privilege applies to communications involving in-house counsel acting as a legal advisor instead of as a corporate officer in a nonattorney capacity. But attorney involvement does not guarantee protection under the attorney-client privilege.⁵⁰ To strengthen the attorney-client privilege defense, corporations should assure the following: (1) the plant manager should send a letter to his or her corporate attorney requesting the attorney's assistance for determining the facility's compliance with environmental laws and regulations; (2) the corporate counsel should then send a memorandum back to the plant manager that indicates that corporate auditors or third-party auditors have been retained by corporate counsel for the purpose of determining the facility's compliance; (3) during and after the multimedia audit, any significant discussions with the plant personnel should be conducted with the attorney present and any audit correspondence should be legended as attorney-client privileged materials; (4) any draft reports concerning the multimedia audit should be reviewed by the corporate counsel; and (5) final reports on the multimedia audit should be sent from the corporate attorney to only those facility personnel that must know the results. While these measures may not prevent discovery of the audit report, they will strengthen corporate counsel's argument that the multimedia audit is protected by the attorney-client privilege.⁵¹

EPA and the DOJ have issued guidelines indicating that they look favorably on companies that implement effective multimedia inspections.⁵² Self-policing will only be helpful, however, if the problems discovered during the internal audit are addressed in a timely manner. Self-policing alone will probably not be deemed a mitigating factor in the assessment of penalties if industry admits that the corporate auditors noted the same problem in its internal multimedia audit that the government discovered. Moreover, failing to address a problem discovered during the audit can create a knowing violation that may subject the facility to criminal sanctions.

If the government chooses to give industry prior notice of the pending government inspection and the amount of time before the inspection allows such an audit, the company ought to perform a smaller-scale audit of its operations. Problems noted during this audit should be either quickly fixed or steps should be taken to correct any long-term problems.

* Preventive Maintenance on All Equipment That May Have an Impact on the Environment. Too often companies reduce their preventive maintenance program in an effort to save costs, but end up causing greater pollution at the site. Equipment maintenance is critical to continued operation of the facility and the equipment according to specifications. The government may increase a company's penalty if the facility fails to have an adequate preventive maintenance program.⁵³

* If You Don't Use It, Lose It. Some personnel tend to store on site obsolete equipment, containers of "off-spec" material, empty drums, scrap metal, and other materials that may be used in the future. They are rarely ever used. Instead, the scrap metal may rust, which can cause soil stains, and the "off-spec" material may have residue on the sides and top of the containers, which can spread and contaminate the area. Areas like these are likely to be sampled by government inspectors. Therefore, it is better to send scrap metal that does not contain hazardous waste to a scrap dealer, and to dispose of properly or return "off-spec" material to the supplier for an account credit.

Despite the Multimedia Inspection

Despite all of a facility's efforts to prevent violations, 100 percent compliance with the voluminous environmental regulations is impossible. Consequently, there are additional strategies to implement that can minimize the impact of the violations discovered by government inspectors during the multimedia inspection.

* Treat the Government Inspectors Like Any Visitor on Business. Some facility personnel believe that violations discovered during the inspection will be overlooked if they are overly friendly with government inspectors. This is not the case. It is best to be cordial and professional. Just as with any business visitor, it is acceptable to offer coffee or tea before starting any business, but anything beyond that may cause the inspectors to become suspicious that the company has something to hide.⁵⁴ On the other hand, rude or condescending behavior may cause inspectors to review every detail of the company's records and perform an extremely thorough site inspection, which could result in a larger enforcement case. Although it can be argued that such reactions by inspectors are an abuse of power, they are a fact of facility inspections and must be treated accordingly.

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Personnel should be honest when talking to inspectors. Frequently personnel believe that guessing is better than telling the inspectors that they do not know the answer. Instead, it is best for personnel to explain that they do not know but that they will find the answer and inform the inspectors as soon as possible. Guesses that are later discovered to be inaccurate may give the impression that the personnel are incompetent, or worse, are lying. Be certain to have personnel follow up any questions that they cannot answer when questioned.

[] Try to Control the Inspection. Although the government will know a great deal about the facility before entering the premises, the facility personnel are most familiar with the site and should be able to affect the course of the inspection. For instance, the facility personnel could give a site tour that puts the facility in a positive light. Additionally, facility personnel may take the government inspectors in a vehicle to show the entire site. Site tours that provide a broad view of the facility are less likely to show violations than are site walk throughs. This strategy should not be used to hide violations, however, because experienced multimedia inspectors will be familiar with this tactic. A good inspector will probably ask that the vehicle be stopped, walk over to an area of concern, and take any necessary photographs or samples.

[] If Possible, Immediately Correct Any Violations Found During the Site Inspection. Facility personnel accompanying the inspectors during the inspection should carry a permanent marker and several hazardous waste labels, polychlorinated biphenyls labels, and any other labels so that any unlabelled container that is discovered can be labelled during the inspection. Any other items that facility personnel suspect may be needed to correct other potential problems also should be carried during the inspection.

[] Avoid Forum Shopping. "Forum shopping" is the act of seeking an answer from more than one government inspector or attorney in the hope of obtaining an answer more favorable to the facility. While superficially an appealing approach, consider the result when the two government employees find that they have crossed one another. The one that gave the facility a less favorable answer may feel undermined by the inspector or attorney that gave the facility the answer it was looking for. In the future they will be more cautious when giving advice in response to hypothetical questions, and, more importantly, any negative feelings that may be felt by the inspectors may soon be directed at the facility. This could be critical when the decision to exercise prosecutorial discretion is an option. Therefore, although forum shopping may work for a while, it eventually backfires and should be avoided.

[] Avoid Going Over Someone's Head. Just as forum shopping does not make friends of government inspectors, similarly it is best to resolve any differences with a facility's government contact directly, without contacting his or her superior. Going over an inspector's head can embarrass him and harm the facility's relationship with him. Therefore, the matter at issue must be of such import to the facility that personnel are willing to risk harm to that relationship. In the event that facility personnel consider going over his head, be certain that they have exhausted every avenue available to them before discussing the issue with his supervisor. Finally, if facility personnel have decided to contact a superior, it is best if they forewarn the government employee that they believe that negotiations have reached an impasse, making it necessary to contact his supervisor.

[] Avoid Speaking to Government Employees in a Condescending Way. Engineers sometimes become frustrated when dealing with an abundance of regulations and government regulators. Technical staff are usually certain of their position and find it difficult to understand how anyone could possibly disagree. Consequently, they may express their frustration by speaking down to the government inspectors or attorneys. The best approach may be to view the multimedia inspection as an opportunity to tell the government how facility personnel view the regulations. Individuals who are patient are the most successful.

After the Multimedia Inspection

After the inspection is completed, facility personnel should ask the inspectors what violations were discovered at the facility. Once they are informed about the violations, the next step is mitigating the situation. Facility personnel should correct any technical difficulties with equipment, operations, or maintenance as soon as possible. The government should be notified in writing of the changes the facility makes to improve its environmental compliance. All of the information presented to the government regarding the changes should detail both any steps showing that the facility is going beyond what is required by the regulations and any modifications to procedures that will prevent future violations. The facility should continuously update the government as to the status of each remediation step being taken at the facility.

Paperwork violations should be corrected as soon as possible, even if the paperwork needs to be prepared. This is especially true where penalties may be accruing for every day that a report is not provided to the government. To prepare a report that should have been submitted to the government, facility personnel can develop it to the best of their knowledge. The document should be dated with the date it was prepared, the name of the person who completed the document, and any signature of a corporate official that may be required. When presented to the government, it should be made very clear that the report was not at the facility at the time of the inspection, it was prepared after the inspection, and it is the facility's response demonstrating its efforts to comply with the regulations. After the government has an opportunity to review the documents, the facility may want to contact the appropriate individual and ask if the report satisfies the regulatory requirements. If the report does not, facility personnel should make any other necessary corrections and resubmit the corrected document to the government.

After the Enforcement Action Is Brought

After the government decides to bring an enforcement action, typically there will be penalty and technical remedy requirements that must be performed to return the facility to compliance.

[24 ELR 10314]

[] Dealing With the Technical Remedies. If the technical remedies proposed by the government seem excessive, determine what technical assumptions the government made. Then review EPA guidance documents, Office of Solid Waste Emergency Response directives, and any other guidance documents EPA has developed to determine whether the government's actions were consistent with its own guidance. Present this information to the government in a nonadversarial way. Because the government's remedies are based only on what it knows from its inspection and its record search, there may be issues or mitigating factors that the government has not considered. Therefore, a facility may be able to "chip away" at the government's technical remedies. For example, a facility may be able to reduce a penalty that the government set using its penalty policy by supplying reasons for the government attorney to lower the penalty, such as that the violation was the result of a third party.⁵⁵

[] Pollution Prevention Projects Help to Lower Penalties. Facilities can propose supplemental environmental projects (SEPs) to lower their penalties and improve environmental compliance. Five types of SEPs may be considered during enforcement proceedings: pollution prevention projects,⁵⁶ pollution reduction projects,⁵⁷ environmental restoration projects,⁵⁸ environmental audit programs,⁵⁹ and environmentally related public awareness projects.⁶⁰ Projects that do not qualify as SEPs include general educational or environmental awareness projects, and environmental research at a university.

A penalty can be reduced by 100 percent, but the government must recover at least the economic benefit that was gained by the company's noncompliance with the regulations. A penalty reduction is dependent on the percentage by which the pollutant was lowered, the toxicity of the pollutant, a facility's good-faith efforts, its willingness to perform a pollution prevention project, the quality of the work, the success of the project, and the ability of the facility to meet the agreed-to time schedule.

The government will only accept SEPs that have a sufficient nexus between the violation and the proposed project, even if the project is otherwise beneficial to the community. Additionally, completion of past SEPs will not serve to lower the penalty. Some agencies will not consider SEPs that have been implemented after the violations were discovered and before the government has an enforcement meeting with the company. Unfortunately, this policy encourages some companies to wait until violations are discovered and an enforcement meeting held before trading a SEP for a lower penalty.

The amount of time needed to implement a SEP may affect the penalty. Traditionally, a company's penalty would increase the longer it took to return to compliance. The purpose of this policy was to encourage companies to return to compliance as soon as possible. The advent of SEPs, particularly SEPs that take several years to implement, however, debilitated this policy. For SEPs that take several years to implement, the company's penalty would be higher, and the facility lacked incentive to return to compliance quickly. To avoid this disincentive, EPA has issued a policy of calculating a penalty that incorporates pollution prevention.⁶¹

If a SEP is unsuccessful but the company makes a good-faith effort to implement the project, the government still may reduce the gravity component of the penalty and consider the amount of work performed by the company.⁶²

List of "Don'ts" When Dealing With the Government

[] Don't Tell Government Technical Staff or Attorneys That Paperwork Violations Are Unimportant. The reports facilities are required to submit are important to the government. They indicate compliance with reporting requirements and environmental laws, regulations, and permit levels. Without this information, the government may not investigate a facility that continues to violate its permits until it undergoes inspection. Additionally, citizen groups can use these same reports as the basis for suits against the facility in order to obtain court-ordered compliance. Even if a report does not reveal permit level exceedances, it still is important because it may be a building block to remediation of future environmental problems. A better approach than not submitting the reports is to concede the facility's violations but argue, where feasible, that the seriousness of them is less than those violations that actually cause harm to the environment.

[] Don't Whine. It is unproductive to argue that the regulations are unrealistic. If the rules do not suit the facility's operations, it has the option to lobby Congress for changes to the statute. Until such changes are adopted, the facility must comply with all applicable regulations.

Do not complain about selective enforcement. The government has limited resources and cannot be convinced that it is inappropriately delegating them in its enforcement efforts.

Also, facility personnel should not argue that the "facility has been doing it this way for years and the last inspector never said anything about it." A previous inspector's failure to discover a violation does not excuse a facility from the violations discovered during the most recent inspection. Moreover, this argument may end up increasing the facility's penalty because the personnel have admitted that the violation has occurred for years.

Finally, facility personnel should not argue that they were unaware that the facility had to comply with environmental [24 ELR 10315] regulations. Every person has a duty to inform himself or herself of the regulations.

[] Don't Make Legal Admissions. It is critically important that facility personnel do not make legal admissions to inspectors before speaking to an attorney. This is particularly true when inspectors have completed their facility inspection and inform the facility personnel about the violations discovered. Make certain that the personnel do not agree with inspectors that any alleged violations are in fact violations. This may require specific training of facility personnel.

Conclusion

A multimedia inspection can be a company's worst nightmare. If a facility is properly prepared, however, it can survive these inspections. Proper preparation will require the formulation and implementation of strategies to minimize environmental liabilities. Appropriate preinspection strategies should focus on effective training, equipment maintenance, and fail-safe warning systems. During the multimedia inspection, facility personnel should correct violations as soon as possible after discovery and should maintain proper relations with the inspectors. If an enforcement action is brought against the facility, the company should consider using pollution prevention projects to lower proposed penalties. Implementing these strategies through the different phases of a multimedia inspection should ease the anxiety that a multimedia inspection usually prompts and the likelihood of harsh penalties.

1. The term "operator" is used in this Article to indicate the persons or entities potentially liable for violations of the various environmental laws and regulations. Most regulatory provisions extend jointly and severally to both "owners" and "operators." An "owner" may be the owner of the land on which the facility lies or the owner of the business assets, while the operator may be a mere tenant of the premises. Absentee owners are deemed to be as legally responsible for violations as are present operators in most instances. Standards for Owners and Operators of Hazardous Waste Treatment, Storage, and Disposal Facilities, 45 Fed. Reg. 33169 (May 19, 1980). Consequently, most permitting regulations require permit applications and modifications to be executed by both owners and operators, thus imparting to them actual knowledge of the terms and conditions of the permit. See, e.g., id.

2. See, e.g., 40 C.F.R. pt. 272.

3. "Reconsolidation" of Authority Would Lead to Stronger EPA Enforcement, Browner Says, Env't Rep. (BNA) No. 13, at 547 (July 30, 1993).

4. NEIC, PB92131553, MULTIMEDIA INVESTIGATION MANUAL (Mar. 1992). If a facility is considering performing its own multimedia audit, this manual provides excellent information on how to proceed and lists inspection manuals that are specific to regulatory programs.

5. EPA, Office of Public Affairs, Environmental News (July 22, 1993) (press release) (on file with author).

6. Centralizing EPA's enforcement functions, however, will not minimize the regional offices' inspection and enforcement initiatives. For example, EPA Region V, which is headquartered in Chicago and includes Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin, has long been the leader among EPA regions in number of enforcement actions brought and penalty amounts. Given EPA's expressed priority for multimedia enforcement, Region V will no doubt seek to maintain its leading enforcement position in actively pursuing multimedia inspections. In fact, Region V's Office of Regional Counsel has its own multimedia division.

7. Id.

8. See, e.g., Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9604(e), ELR STAT. CERCLA § 104(e); Clean Air Act, 42 U.S.C. § 7414(a), ELR STAT. CAA § 114(a); Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. §§ 136f(b), 136(g), ELR STAT. FIFRA §§ 8(b), 9(a); Federal Water Pollution Control Act, 33 U.S.C. § 1318(a), ELR STAT. FWPCA § 308(a); Resource Conservation and Recovery Act, 42 U.S.C. § 6927, ELR STAT. RCRA § 3007(a); Safe Drinking Water Act, 42 U.S.C. § 300j-4(a), ELR STAT. SDWA § 1445(a); Toxic Substances Control Act, 15 U.S.C. § 2610, ELR STAT. TSCA § 11(a), (b).

9. 42 U.S.C. §§ 11001-11050, ELR STAT. EPCRA §§ 301-330.

10. Id. § 11023, ELR STAT. EPCRA § 313.

11. Id. § 11022, ELR STAT. EPCRA § 312.

12. A facility is required to file a Form R report if it falls into one of the two following categories. A facility that "manufactures" or "processes" toxic chemicals must file Form R if it (1) employs 10 or more full-time employees, (2) has a standard industrial classification (SIC) code 20 through 39, and it (3) "manufactures" or "processes" any listed chemical in quantities greater than 25,000 pounds per calendar year. Id. § 11023(b), (f)(1)(B), ELR STAT. EPCRA § 313(b), (f)(1)(B). "Manufacture" means to produce, prepare, compound, or import a listed toxic chemical. EPA, TOXIC CHEMICAL RELEASE INVENTORY REPORTING FORM R INSTRUCTIONS, at 8 (Jan. 1993). "Process" means the preparation of a listed toxic chemical after its manufacture for distribution and commerce. Id.

A facility that "otherwise uses" a toxic chemical must file Form R if it (1)employs 10 or more full-time employees, (2) has a SIC code 20 through 39, and (3) "otherwise uses" any listed chemical in amounts greater than 10,000 pounds of that toxic chemical within a calendar year. 42 U.S.C. § 11023(b), (f)(1)(A), ELR STAT. EPCRA § 313(b), (f)(1)(A). "Otherwise use" encompasses any activity involving a listed toxic chemical at the facility that does not fall under the definition "manufacturer" or "process." Id.

13. 40 C.F.R. § 262.41. The biennial reports are also filed with the government.

14. 40 C.F.R. pt. 262 subpt. B. Manifests are kept on site, although states may require a copy to be filed with the appropriate state agency.

15. An individual is in "custody" when his or her freedom of movement has been limited by the government. Orozco v. Texas, 394 U.S. 324 (1969). Interrogation occurs when the government should know that its actions are reasonably likely to elicit an incriminating response from the suspect. Rhode Island v. Innis, 446 U.S. 291 (1980). Volunteered statements or spontaneous remarks, however, are not considered statements given under interrogation. Id. at 300.

16. See Miranda v. United States, 384 U.S. 436 (1966).

17. When dealing with medium-priority violators, the government may issue a notice of violation letter, warning letter, or administrative order, or may file a complaint.

18. Low-priority violators are those facilities that have Class II violations only. These violators normally will be issued notice of violation or warning letters. The exception is when a company continuously violates RCRA. In that case, the government may then reclassify the company as a high-priority violator.

19. A violation is either considered Class I or Class II. Class I violations are the most serious. Class II violations are defined in the negative. They are violations that do not meet the definition of Class I violations. A failure to maintain records is an example of a Class II violation.

20. EPA, OFFICE OF WASTE PROGRAMS ENFORCEMENT, OWPE 92RE001C, ENFORCEMENT RESPONSE POLICY 5 (Dec. 1987).

21. Id. at 6.

22. Id. at 5.

23. The costs associated with nonconformance may be reason enough for a facility to avoid high-priority classification. The cost of non-conformance with environmental regulations includes attorneys fees, consultants fees, equipment modifications, labor, any remediation costs, and penalties.

24. "'Generator' means any person, by site, whose act or process produces hazardous waste identified or listed in part 261 of this chapter or whose act first causes a hazardous waste to become subject to regulation." 40 C.F.R. § 260.10.

25. For example, a large-quantity generator is subject to increased reporting requirements in comparison to a small-quantity generator or conditionally exempt small-quantity generator. Compare 40 C.F.R. § 262.40 (recordkeeping) with 40 C.F.R. § 262.41 (biennial report) and 40 C.F.R. § 261.5 (special requirements for hazardous waste generated by conditionally exempt small-quantity generators).

26. 40 C.F.R. § 262.34. The Fifth Circuit discussed the two-pronged test for the RCRA permit exemption in United States v. Baytank (Houston), Inc., 934 F.2d 599, 607, 21 ELR 21101, 21104-05 (5th Cir. 1991), stating that "the government can prove a violation of § 6928(d)(2)(A) either by showing unpermitted storage for longer than 90 days, see 40 C.F.R. 262.34(b), or by showing unpermitted storage for any period of time in violation of any of the safe storage conditions of 40 C.F.R. 262.34(a)."

27. Baytank, 934 F.2d 599, 607, 21 ELR at 21104-05; 40 C.F.R. § 262.34(a).

28. "Baytank argues that a permit is required only for storage over 90 days. This assertion is misleading. EPA regulations do allow a facility to store hazardous wastes for up to 90 days without a permit, but only if it complies with certain safe storage conditions. 40 C.F.R. § 262.34(a).…" Id. (emphasis in original).

29. Id.

30. 40 C.F.R. § 262.34.

31. Baytank, 934 F.2d at 615, 21 ELR at 21108-09.

32. A small-quantity generator is one that generates less than 1,000 kilograms of hazardous waste in a calendar month. 40 C.F.R. § 260.10.

33. Id. § 262.34(f).

34. A conditionally exempt small-quantity generator may still have hazardous waste that becomes subject to the 40 C.F.R. §§ 262-266, 268, 270, and 124 regulations, even if the generator produces equal to or less than one kilogram of acute hazardous waste or 100 kilograms of waste resulting from a cleanup, or 100 kilograms of hazardous waste. These hazardous wastes become subject to full regulation if the generator fails to make a hazardous waste determination in accordance with 40 C.F.R. § 262.11, or the operator accumulates on site over 1,000 kilograms of hazardous waste. Id. § 261.5. The conditionally exempt small-quantity generator then may store the hazardous waste for an additional 180 days without having interim status or a permit. 53 Fed. Reg. 27163 (July 19, 1988). The conditionally exempt small-quantity generator, however, may still easily become subject to the next level of stricter regulations by failing to follow the "safe storage conditions."

35. Drums that are considered in poor condition are rusting, bulging, or badly dented.

36. 40 C.F.R. § 262.34(d).

37. Under 40 C.F.R. § 122.48, discharge monitoring reports are due on a quarterly basis, butstates may require the report every month.

38. "Excursion" is used here to mean an exceedance of the national pollutant discharge elimination system limit for the facility.

39. EPA typically requires a state to file enforcement actions against all major dischargers that exceed 5 percent of the major dischargers and that have significant excursions in that state.

40. See, e.g., Chesapeake Bay Found. v. Gwaltney of Smithfield, Ltd., 484 U.S. 49, 18 ELR 20142 (1987).

41. EPA, ISSUANCE OF GUIDANCE ON THE TIMELY AND APPROPRIATE ENFORCEMENT RESPONSE TO SIGNIFICANT AIR POLLUTION VIOLATORS 3 (1992).

42. Id.

43. Id.

44. Id.

45. Id.

46. Id.

47. A common permit violation is failing to obtain a construction permit prior to constructing a source or implementing a modification to the operation or equipment that increases the amount of any air contaminant. Permits are also generally required for all sources that have the potential to emit any air contaminant. The types of permits required for a facility vary with the emissions and include state operating permits, federally enforceable state operating permits, and CAA permits.

48. See 42 U.S.C. § 7411, ELR STAT. CAA § 111.

49. See, e.g., United States v. Chevron U.S.A., Inc., No. 88-6681, 1989 U.S. Dist. LEXIS 12267, *17-18 (E.D.Pa. Oct. 16, 1989).

50. Id. at *18 (holding that there must be evidence that the attorney was acting "in his or her capacity as an attorney rather than as business advisor … [and] the communication's primary purpose must be to gain or provide legal assistance.")

51. See generally Upjohn Co. v. United States, 449 U.S. 383, 395 (1981) (stating that the attorney-client privilege "only protects disclosure of communication; it does not protect disclosure of the underlying facts by those who communicated with the attorney").

52. The DOJ encourages "self-auditing, self-policing and voluntary disclosure of environmental violations by the regulated community by indicating these are mitigating factors in the Department's exercise of criminal environmental enforcement discretion." U.S. DOJ, FACTORS IN DECISIONS ON CRIMINAL PROSECUTIONS FOR ENVIRONMENTAL VIOLATIONS IN THE CONTEXT OF SIGNIFICANT VOLUNTARY COMPLIANCE OR DISCLOSURE EFFORTS BY THE VIOLATOR 1 (1991).

The DOJ has even specified:

The attorney for the Department should consider the existence and scope of any regularized, intensive, and comprehensive environmental compliance or management audit. Particular attention should be given to whether the compliance or audit program includes sufficient measures to identify and prevent future noncompliance, and whether the program was adopted in good faith in a timely manner.

Id. at 4.

53. EPA, OFFICE OF ENFORCEMENT (RCRA DIVISION) AND OFFICE OF SOLID WASTE AND EMERGENCY RESPONSE, OSWER DIRECTIVE 9900.1A, 1990 REVISED RCRA CIVIL PENALTY POLICY 34. EPA may increase the penalty based on the willfulness or negligence of the violator. The factors considered are: (1) the control the violator had to prevent the violation, (2) the foreseeability of the events leading to the violation, and (3) whether the violator took reasonable precautions to prevent the violation. Pollution control equipment that is clearly maintained in poor condition justifies an increased penalty.

54. Inspectors are required to decline offers of luncheons, gratuities, or favors. EPA, OSWER DIRECTIVE 9938.02(b), RCRA INSPECTION MANUAL 1-20 (1993).

55. EPA, OSWER DIRECTIVE 9900.1A, supra note 53, at 35.

56. "A pollution prevention project substantially reduces or prevents the generation or creation of pollutants through use reduction. A project which substantially reduces the discharge of generated pollutants through innovative recycling technologies may be considered a pollution prevention project if the pollutants are kept out of the environment in perpetuity." EPA, POLICY ON THE USE OF SUPPLEMENTAL ENVIRONMENTAL PROJECTS IN ENFORCEMENT SETTLEMENTS 2 (1991).

57. A pollution reduction project is one that "goes substantially beyond compliance with discharge limitations to further reduce the amount of pollution that would otherwise be discharged into the environment." Id.

58. An environmental restoration project is one that "not only repairs the damage done to the environment because of the violation, but which goes beyond repair to enhance the environment in the vicinity of the violating facility." Id. at 3.

59. Generally, environmental audits do not qualify as a supplemental project "unless a person undertakes additional auditing practices that prevent or correct recurring violations." Id.

60. Acceptable public awareness projects include providing the public or regulated community with technical information for pollution prevention. Providing information to the regulated community about the importance of complying with environmental laws is also considered a SEP. Id. at 4.

61. EPA, supra note 56, at 7.

62. EPA REGION V, GUIDANCE ON INCLUSION OF POLLUTION PREVENTION INTO RCRA ENFORCEMENT SETTLEMENTS 4 (1991).