Managing the Commercial Impact of the Coronavirus: Top Environmental Considerations

19 March 2020 Coronavirus Resource Center:Back to Business Blog
Authors: Ann Marie Uetz Sarah A. Slack Nicholas R. Johnson

"You don’t want to be complacent. You always want to be ahead of the curve.” Dr. Anthony Fauci, M.D., Director of National Institute of Allergy and Infectious Diseases 

Even though the coronavirus poses novel and complex challenges to all aspects of a company’s operations, it is not an excuse for companies to press “pause” on their obligations to comply with environmental laws and permits.  Unlike many contractual obligations, most environmental permits do not contain “force majeure” clauses that excuse non-compliance due to circumstances outside of the company’s control.  Although some agencies have begun to accept requests for enforcement discretion based on COVID-19 exigencies, as discussed further below, it is not a given that an environmental agency will exercise its discretion to excuse untimely compliance, even in crisis situations. 

Companies and their EHS managers will want to consider the following issues: 

Environmental Compliance – Ongoing Obligations

Compliance with environmental laws and permits is still required, even in exigent circumstances like sudden reductions in work force or significant disruptions in supply chains.  As such, ensuring compliance with obligations under environmental laws is important not only to ensure that current facility operations are not disrupted, but also to ensure that permits remain valid and in place for future use.  

Companies should evaluate whether a facility will remain fully operational or temporarily reduce operations to determine what compliance issues will need to be managed in order to mitigate and minimize commercial impacts from the coronavirus. 

Managing Ongoing Operations - EHS Management and Continuity Planning  

EHS staff often hold specialized knowledge related to facility operations and environmental compliance obligations under various environmental laws.  In order to ensure ongoing operational compliance, it is important that this knowledge be documented in case key EHS staff are not available.  In the alternative, if your company outsources all or part of your EHS obligations to third-party contractors, it is important to confirm that backup contractors are in place, or that there is a plan to transition this work to in-house personnel as necessary. 

Some specific considerations include: 

  • RCRA waste management obligations: 
    • Hazardous waste determinations are often made based on “generator knowledge” – which could be a single person at your facility with knowledge of the contents of waste streams.  This information should be documented and available, and a backup person should also be available if necessary and to ensure redundancy in the event of accident or illness.  
    • If your site temporarily stores hazardous waste, protocols should be in place to ensure storage onsite is not longer than 90 days allowed by law. 
    • If you use a contractor to pick up and transport hazardous waste, a backup contractor should be in place in case your primary contractor is not available.  And depending on facility operations, it may be prudent to evaluate whether additional tanks or vessel storage may be necessary to manage increased onsite storage if waste disposal is disrupted. 
    • States have already begun issuing guidance on how to manage and dispose of COVID-19 medical wastes.  For example, the Texas Commission on Environmental Quality (TCEQ) has issued guidance recommending that the management of waste materials related to COVID-19 from medical facilities should be performed in accordance with routine handling procedures for medical wastes.  Check your state environmental agency websites frequently for updates on this issue, as well as CDC, WHO, and state health department best practice guidelines.  

  • Permit and reporting obligations:  
    • Many facilities have wastewater discharge permits, stormwater discharge permits, or air emissions permits that require regular or periodic monitoring.  Ensuring that monitoring systems are online, powered adequately, and conducting the necessary monitoring is an important compliance obligation.  Confirm whether these monitoring systems are part of any critical infrastructure plan implemented by your company in the case of an emergency, contingency, or other critical situation.    
    • In addition, facilities may have obligations to conduct sampling during or immediately following certain events (for example, stormwater sampling after a rain event), and complying with these requirements means that someone who knows where and how to sample must be available during the relevant times.  
    • Finally, air, stormwater, and wastewater permits generally require timely submission of certain monitoring reports, which may need to be signed by an authorized official of the company.  Therefore, ensuring backup for such signatures is also a necessary party of ongoing compliance. Be sure to check the permit’s definition of “authorized official” before delegating a backup, as the term often means a person with authority to legally bind the company (or is otherwise in an executive position). 
        
  • Ensuring Compliance with Environmental Remedial Obligations: 
    • Many contaminated sites and landfills have remediation equipment that must be operated on a 24/7/365 basis – including groundwater extraction systems or landfill gas collection systems.  In addition, monitoring results from these systems often must be reported periodically to agencies.  It is important that facilities with these types of systems have contingency plans in place (including coordination with the oversight agency, if necessary) to determine what non-essential tasks can be reduced or discontinued in the event that staff are unavailable and need to be redirected.  
    • Many Superfund sites require monthly progress reports to be submitted to the oversight agency.  Often, these reports are cumulative in nature and thus rely on considerable background institutional knowledge to draft.  It is important that the content owner has documented key site information and recent developments in an easily accessible way in case the reporting task needs to be transitioned or temporarily conducted by someone else. 

Short and Long-Term Considerations of Managing Vendor and Supply Chain Disruptions. 

As companies manage the day-to-day changes that come with vendor and supply chain disruption, it is essential to consider to what extent environmental laws may be implicated.  For example: 

  • If a key raw ingredient is no longer available, is a suitable replacement allowed to be used without further approvals?  Under the Toxic Substances Control Act (TSCA), EPA maintains a list of active chemical substances that may be manufactured or imported into the United States, and substances that are not on the active inventory list require submission of a premanufacture notice.  
  • Similarly, as chemical use changes, it is important to consider whether other environmental laws are implicated, like the chemical substance use and release reporting required for use of certain chemicals under the Emergency Planning and Community Right-to-Know Act (EPCRA).   
  • Changes in suppliers may also mean that raw materials or inputs contain different substances, including chemicals in excess of the thresholds for warnings under California’s Proposition 65.  
  • Finally, if you rely upon laboratories for product testing or monitoring requirements, you may need to find alternative labs in the event that your normal lab is unable to process your samples or meet any necessary timetables.    

Agency Outreach and Communication. 

As noted above, businesses cannot currently count on agencies waiving permit or reporting deadlines or requirements, even in this time of crisis.  We are aware of several state agencies that are either currently considering interim enforcement discretion policies or are on the verge of implementing them.  For example, on March 18, the Texas Commission on Environmental Quality (TCEQ) established an email box to accept requests for enforcement discretion, if non-compliance is “unavoidable directly due to impact from the coronavirus.”  TCEQ has stated its intent to reply to such requests within 24 to 48 hours of receipt. 

Even with the potential for agencies to exercise their enforcement discretion, companies should continue, as a best practice, to make every effort to meet current reporting and compliance requirements and deadlines.  Moreover, even if state or federal agencies enact enforcement discretion policies, this fact would not necessarily fully mitigate fines or penalties nor prevent citizens from filing lawsuits under environmental laws with robust citizen suit provisions (California’s Proposition 65 law being one notable example).  

Companies and their EHS managers may want to consider the following proactive steps during the coronavirus disruption: 

  • Document all examples of coronavirus-related EHS disruptions. If your EHS obligations are disrupted for reasons outside of the business’s control, carefully document the cause and the steps taken to address it.  For example, if hazardous waste is left onsite for more than 90 days due to a primary contractor’s force majeure claim, keep a written record of all telephone calls made to backup contractors.  Documenting actions taken in good faith may help mitigate or reduce gravity-based components of any ensuing penalties, and/or to qualify for agency enforcement discretion requests.  For example, TCEQ has clarified that for a request for enforcement discretion to be granted, regulated entities must maintain records “adequate to document activities related to the noncompliance under enforcement discretion, including details of the regulated entity’s best efforts to comply.”      
  • Maintain close communication with regulators. If you anticipate that you may miss a reporting or compliance deadline due to circumstances outside of the company’s control, consider contacting the regulating agency in advance of deadline to inform of the situation.  In our experience, agency staff are often willing to grant reasonable extensions when a company has proactively demonstrated a good-faith effort to maintain compliance.  Even if no extension is granted, documenting advance outreach may help mitigate penalties, as noted above.  

For more information about recommended steps, please contact your Foley relationship partner. For additional web-based resources available to assist you in monitoring the spread of the coronavirus on a global basis, you may wish to visit the CDC and the World Health Organization

Foley has created a multi-disciplinary and multi-jurisdictional team, which has prepared a wealth of topical client resources and is prepared to help our clients meet the legal and business challenges that the coronavirus outbreak is creating for stakeholders across a range of industries. Click here for Foley’s Coronavirus Resource Center to stay apprised of relevant developments, insights and resources to support your business during this challenging time. To receive this content directly in your inbox, click here and submit the form. 

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