Companies must be diligent to ensure that any facility restart is being implemented in compliance with applicable environmental requirements. While there has been some guidance at the federal and state level providing enforcement discretion for non-compliance and identifying circumstances where noncompliance will not be punished, compliance with permits and environmental regulations is expected even when circumstances have made it difficult because of COVID-19. Further, those policies have been criticized and challenged by environmental NGOs and some states, and companies should exercise caution when relying on them.
As we reported previously, on March 26, 2020, EPA issued its temporary COVID-19 enforcement discretion policy, which states that EPA will exercise enforcement discretion for certain civil violations, especially those related to routine compliance monitoring and reporting, that are caused by COVID-19 and the consequences of the pandemic, such as staff shortages or turnaround time by laboratories used to analyze samples.. A number of states have likewise adopted their own measures to assist companies in addressing environmental compliance challenges brought on by the pandemic.
EPA's COVID-19 enforcement policy has been roundly criticized by environmental groups and other critics as an "open license to pollute" and "a 'don't ask, don't tell' policy for polluters." On April 1, 2020, several environmental groups including the Natural Resources Defense Council filed a petition for emergency rulemaking, requesting that EPA publish an interim final rule that would require any regulated entity who failed to conduct required monitoring or reporting in reliance of the enforcement policy to promptly notify the public. Subsequently, on April 16, 2020, these same environmental groups filed suit, arguing that the failure of EPA to address their petition for an interim emergency rule was a violation of the APA.
On May 12, 2020, California and eight other states also filed suit, arguing that EPA's enforcement discretion policy is unenforceable as EPA failed to follow proper administrative procedures in adopting what amounts to a federal regulation. In its complaint, the states identify a number of particular environmental statutes and compliance obligations that pose particular risks for public health and safety and the environment, including stack testing, leak detection and repair, and continuous emission monitoring systems required under the Clean Air Act, compliance monitoring for wastewater discharges under the Clean Water Act, and reportable releases under the Comprehensive Environmental Response, Compensation, and Liability Act.
What You Need to Know Now
As companies seek to restart their operations, we expect that state environmental agencies and environmental groups will be closely monitoring adherence to applicable environmental permit and regulatory standards. We recommend that companies take the following steps to address potential environmental compliance concerns as they prepare for reopening or ramping up their operations:
- Assess your ability to comply fully with existing regulatory and permit requirements, including monitoring and reporting. While the federal policy instructs operators to take action in the event compliance is not reasonably practicable, including minimizing the effects and duration of the noncompliance and documenting all actions taken, some state environmental agency policies, such as California, require that operators notify the regulatory agencies "before falling out of compliance." Assessing in advance whether there will be concerns with falling out of compliance may give you additional flexibility to reach out to state and federal regulatory agencies to determine whether enforcement on such noncompliance should be expected.
- Be mindful of those aspects of operations that will not be covered by the state or federal enforcement discretion policy. In particular, the federal EPA enforcement discretion policy emphasizes the importance of public water systems continuing normal operations and maintenance, including sampling, and excludes accidental releases or criminal violations from enforcement discretion. Environmental agencies in other states, such as Ohio or West Virginia, have issued statements indicating that they expect operators in their state to continue to comply with all rules, regulations, and permitting requirements--thus offering no stance on discretionary enforcement of any particular category of environmental noncompliance--but to contact the appropriate regulatory agency if compliance obligations are practicable due to COVID-19.
- Consider whether there are particular polices that apply to your industry. For example, as a result of the decline in oil prices, regulatory authorities in states such as Texas are considering policies to relax or extend certain regulatory requirements, such as extending certain filing deadlines for venting and flaring events and increasing the grace period allotted before an operator must begin plugging and abandonment activities at nonproducing wells, in order to allow oil and gas operators time to weather the combined COVID-19 and oil price shocks.
- Document mitigation efforts, the steps taken to return to compliance, and especially how COVID-19 was the cause of the noncompliance. The EPA's enforcement policy hinges on the ability of the operators to demonstrate that the noncompliance was a result of the COVID-19 pandemic, which may cause worker shortages through travel and social distancing restrictions, workers who can no longer come in as a result of illness, or changes to operations at laboratories or subcontractors that may affect the ability of a facility to comply with all federal environmental permits, regulations, and statutes. Thus, not all violations or incidents of noncompliance that occur during the pandemic will be given discretion, only those for which the operator can tie back to operational challenges caused by COVID-19.
For facilities that relied on EPA's policy during any extended slowdown of shutdown in their operations, it is critical that they both review the adequacy of the documentation of their inability to comply with applicable environmental requirements and implement a documented plan to return to compliance in connection with their restart of operations. This is especially important for those facilities subject to the heightened risks identified by environmental groups and states in the legal challenges to EPA's policy.
Baker McKenzie's Environmental Group has been advising companies on the environmental challenges confronted during the COVID-19 crisis. We remain available to assist in developing company and site specific solutions to these issues as the need might arise.