New Risk Management Program Risks Erin Ward and Taylor Hoverman - PowerPoint PPT Presentation

New Risk Management Program Risks Erin Ward and Taylor Hoverman February 20, 2017

RMP Enforcement

Enforcement Actions RMP Enforcement Data Approximate number actions since 2004 2,800 1103 in the last 5 years • 20 + Number of judicial actions Amount paid in penalties, injunctive relief, $ 261M + and supplemental environmental projects Nearly $45M in penalties alone • Hogan Lovells | 3

EPA Enforcement Data – All RMP Facilities Enforcement Actions 350 300 250 200 150 100 50 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Hogan Lovells | 4

EPA Enforcement Data – All RMP Facilities Judicial Settlements 5 4 3 2 1 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Hogan Lovells | 5

EPA Enforcement Data – All RMP Facilities Penalties $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Hogan Lovells | 6

EPA Enforcement Data – All RMP Facilities Average Amount per Action $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Penalties SEP Injunctive Relief Hogan Lovells | 7

Enforcement Actions Data for Petrochemical Manufacturers and Refineries 87 Actions since 2004 59 in the last 5 years • 7 Judicial actions Paid in penalties, injunctive relief, and $168M supplemental environmental projects Over $11.3M in penalties alone • Hogan Lovells | 8

EPA Enforcement Data – Petrochemical Facilities Actions Against Petrochemical Facilities 18 16 14 12 10 8 6 4 2 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Hogan Lovells | 9

EPA Enforcement Data – Petrochemical Facilities Penalties $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Hogan Lovells | 10

EPA Enforcement Data – Petrochemical Facilities Average Amount per Action $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Penalties per action SEP per action Injunctive relief per action Hogan Lovells | 11

Recent Enforcement Actions Judicial Settlements Millard Refrigerated Services (2015) $3M penalty Tyson Foods, Inc. (2013) $3.95M penalty, injunctive relief (audits) Kinder Morgan (2012) $316,000 penalty BP North America (2010) $15M penalty, injunctive relief Hogan Lovells | 12

National Enforcement Initiative Background • 3-year cycle • Frequently extend into later cycles • Focuses limited resources on areas where EPA believes: – Significant non-compliance – Federal enforcement efforts can make a difference Hogan Lovells | 13

National Enforcement Initiatives Fiscal Year 2017 – 2019 Reducing air pollution from largest sources • Cutting hazardous air pollutants (expanded initiative) • Ensuring energy extraction activities comply with environmental laws • Reducing pollution from mineral processing operations • Reducing risks of accidental releases at industrial and chemical facilities • (new initiative) Keeping raw sewage and contaminated stormwater out of Nation’s waters • Preventing animal waste from contaminating surface and ground water • Keeping industrial pollutants out of the Nation’s waters (new initiative) • Hogan Lovells | 14

National Enforcement Initiatives Fiscal Year 2017 – 2019 Reducing air pollution from largest sources • Air Cutting hazardous air pollutants (expanded initiative) • Energy Ensuring energy extraction activities comply with environmental laws Extraction • Reducing pollution from mineral processing operations Hazardous • Reducing risks of accidental releases at industrial and chemical facilities • Chemicals (new initiative) Keeping raw sewage and contaminated stormwater out of Nation’s waters • Water Preventing animal waste from contaminating surface and ground water • Keeping industrial pollutants out of the Nation’s waters (new initiative) • Hogan Lovells | 15

Recent Enforcement Actions Criminal Prosecutions Mann Chemical LLC (2015) $200K fine 3 years probation Roberts Chemical Company, Inc. (2015) $200K fine 5 years probation Hershey Creamery Company (2008) $100K fine 1 year probation Hogan Lovells | 16

Worker Endangerment Initiative Background • Joint effort between DOJ and Labor since December 2015 – OSHA, Mine Safety and Health Administration, and Wage and Hour division • Title 18 and environmental criminal offenses • DOJ Environment and Natural Resources Division – Increase frequency and effectiveness of prosecuting worker endangerment violations – Strengthening efforts to pursue civil cases involving worker safety violations Hogan Lovells | 17

Revised EPA RMP Regulations

EPA Proposed Rule Third-Party Audit Requirements Third-party audits required after: 1 Reportable releases • Findings of significant non-compliance with Prevention Program 2 or 3 • requirements Ø At the discretion of the implementing agency 2 Stringent independence criteria Findings of third-party audit treated as deficiencies 3 Submit schedule to correct deficiencies within 90 days with certification • 4 Precludes attorney-client privilege for third-party audit reports and “related records” Hogan Lovells | 19

EPA Final Rule Third-Party Audit Requirements Third-party audits required after: 1 Reportable releases • Findings of significant non-compliance with Prevention Program 2 or 3 • requirements Ø At the discretion of the implementing agency Identified conditions that could lead to accidental release • 2 Stringent independence criteria Relaxed the standard in the final rule • Findings of third-party audit treated as deficiencies 3 Submit schedule to correct deficiencies within 90 days with certification • Precludes attorney-client privilege for third-party audit reports and “related records” 4 Facility retains audit reports – nothing submitted to implementing agency • Hogan Lovells | 20

EPA Final Rule Assessment Third-Party Audit Problems ü Third-party audits often less thorough and informed ü Implementing agencies discretion to require them ü Independence still constraining ü Uncertainty regarding scheduled compliance audits Hogan Lovells | 21

EPA Proposed Rule Safer Technology Alternative Analysis (STAA) Requirements Requires an assessment of Inherently Safer Technology 1 Additional element of PHA • 2 Not required to implement IST but must assess feasibility 3 Required for Program 3 facilities in 3 industries: Petroleum and coal products manufacturing (NAICS 324) • Paper manufacturing (NAICS 322) • Chemical manufacturing (NAICS 325) • Hogan Lovells | 22

EPA Final Rule Safer Technology Alternative Analysis (STAA) Requirements Requires an assessment of Inherently Safer Technology 1 Additional element of PHA • 2 Not required to implement IST but must assess feasibility 3 Required for Program 3 facilities in 3 industries: Petroleum and coal products manufacturing (NAICS 324) • Paper manufacturing (NAICS 322) • Chemical manufacturing (NAICS 325) • Hogan Lovells | 23

EPA Final Rule Assessment Safer Technology Alternative Analysis (STAA) Problems ü Difficult to implement after design phase ü Few technologies are “inherently safer” across the board - Could result in risk-shifting ü Often IST is not feasible or it would have been implemented ü Fodder for environmental groups and community organizations - Could demand implement IST regardless of cost - Potential hindsight analysis in case of an accidental release ü No benefit of assessing IST if not implemented Hogan Lovells | 24

EPA Proposed Rule Responding Facility Designation Requirements 1 Allows local emergency response agencies to designate a facility as a “responding facility” Responding facilities have enhanced emergency preparedness • requirements Hogan Lovells | 25

EPA Final Rule Responding Facility Designation Requirements 1 Allows local emergency response agencies to designate a facility as a “responding facility” Responding facilities have enhanced emergency preparedness • requirements Hogan Lovells | 26

EPA Final Rule Assessment Responding Facility Designation Problems ü Illegal delegation of regulatory authority ü No opportunity to contest or appeal ü EPA removed this provision from the final rule because ü It would allow local governments to shift their emergency response obligations to facilities ü Small facilities cannot manage all their emergency response needs Hogan Lovells | 27

EPA Proposed Rule Required Disclosures to LEPCs Names and quantities of regulated substances over threshold quantity 1 Accident history information 2 Compliance audit report summaries 3 Date • Name and contact information of auditor and facility contact • Brief description of audit findings and appropriate response • Schedule for addressing findings • Hogan Lovells | 28