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
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