Over 17,000 Pages in 2000!!
U. S. EPA’s Short Term Agenda
(November 30, 2000)
TSCA 8%
RCRA/CERCLA 15%
CWA/OPA 14%
OTHERS 9%
CAA 46%
FIFRA 3%
SDWA 5%
449 Regulations Under Development (OSHA-54)
Concentration of Lawyers in Developed Countries
3 07 1 02
8 2 1 2
0 5 0 1 00 1 50 2 00 2 50 3 00 3 50
L a w ye r s pe r 1 00,000
J apan G e r many U .K . U .S.
Figure 1.4 State Regulatory Stringency
Figure 1.5 Concentration of Lawyers in Developed Countries
Growth in Visibility
It was not so long ago that a company’s EH&S information was known only to them and to the regulatory agencies. This is no longer true. With the advent of community and worker right-to-know legislation, and the Internet, EH&S data are available to all citizens with the click of a mouse. For example, the three following Internet sites provide detailed information on a facility’s historical compliance:
• www.epa.gov/enviro – Provides U.S. EPA historical data on all envi- ronmental media for each regulated facility.
• www.scorecard.org – Developed by the Environmental Defense Fund, provides historical data on Community Right-to-Know Toxic Release Inventory Facility Reports.
• www.osha.gov/oshstats – Provides OSHA inspection data for each in- spected facility.
Information can be gathered and analyzed quite easily using available data. For example, Figures 1.6 and 1.7 provide interesting state-by-state and year-by-year comparisons of Toxic Release Inventory data. This is only the “tip of the iceberg.”
There is little that is not known or that could not be obtained about EH&S compli- ance at a given facility.
1998 TRI Reporting Total Releases by State
Figure 1.6 1998 TRI Reporting — Total Releases by State
1998 TRI Reporting
Strong Early Reductions in Total Releases*
* Adjusted for regulatory deletions and additions
* Adjusted for regulatory deletions and additions
45.6% Total Reduction Total Releases (Billion lbs/year)
Growth in Enforcement
In this regulatory setting, one can only wonder if “fail-safe” management of com- pliance is, indeed, an achievable objective. Yet, the penalties for not complying are far too intimidating to risk applying anything but extreme diligence towards meet- ing standards and applying good management practices. Civil penalties of up to
$25,000 per day are common in most statutes.
In addition, the U.S. EPA has reemphasized its enforcement role and has moved toward a policy of taking enforcement action against corporate officials as well as their companies. The following cases are some of the more unique and interesting examples of that policy reported by the U.S. EPA in 1998.1 Note that several of the cases actually involve companies that were in the business of environmental man- agement and protection.
■ GTE Corporation. In January 1998 the largest settlement under the U.S.
EPA’s Audit Policy (see Chapter 2) was reached when GTE agreed to re- solve 600 violations at 314 facilities in 21 states. The company paid a fine of
1 Taken from U.S. EPA’s Enforcement and Compliance Assurance Accomplishments Report—FY 1998, June 1999.
Figure 1.7 1998 TRI Reporting — Strong Early Reductions in Total Releases
*Adjusted for regulatory deletions and additions
about $50,000; the U.S. EPA waived another $2.38 million in potential pen- alties. However, the U.S. EPA did undertake an enforcement initiative against ten other telecommunications companies, essentially GTE’s competitors, to determine if similar violations existed at their sites.
■ United States v. Louisiana Pacific Corporation. The Louisiana Pacific Cor- poration (LPC) operated a wood products plant in Colorado. An indictment alleged that the plant manager and plant superintendent violated the Clean Air Act and committed mail and wire fraud. The Company was convicted of 18 felony counts and fined $36.5 million. The plant manager was sentenced to ten months of jail time and the superintendent, six months.
■ United States v. Safewastes, Inc. In 1993 the Sacramento, California Fire Department inspected a warehouse which led to the discovery of illegally stored hazardous wastes and rocket motors, warheads, 17,000 artillery shells, and 7,500 pounds of explosives. The two principals involved were charged with illegal storage and transportation of hazardous wastes, among other firearms infractions, and were given 21 and 51 months of jail time.
■ United States v. Hess Environmental Laboratories, Inc. Investigations by federal and state regulatory agencies revealed that this lab in Pennsylvania was providing fraudulent analyses of environmental samples to its custom- ers. The lab was fined $5 million and the director was sentenced to 12 months of jail time. In May of 1997 the lab closed and terminated its business.
■ United States v. Barry Shields, et al. The IEMC Environmental Group was contracted to remove asbestos-containing materials from the Hess Depart- ment Store in Louisville. As a result of improper removal, the storeowner was ordered to conduct an emergency cleanup, which cost about $1 million.
The IEMC project manager was sentenced to 51 months in prison and the onsite supervisor, ten months.
■ United States v. Warner Lambert Company, Inc. This company was con- victed of falsifying discharge monitoring reports in 1998. The receiving waters were used by poor area residents for drinking water and recreational pur- poses. The company was fined $3 million and the plant manager was sen- tenced to 21 months in prison.
■ United States. v. Royal Caribbean Cruise Lines, Ltd. In October 1994, the U.S. Coast Guard observed the cruise ship Sovereign of the Seas emitting an oil sheen off the coast of Puerto Rico. When boarded by the Coast Guard, a false logbook was presented. Additionally, under orders of a senior officer, the oil-water separator bypass pipe was removed. The disposal of this pipe was documented by a Coast Guard videotape. The cruise line paid over $9
million in fines and was convicted of witness tampering, destruction of evi- dence, and conspiracy.
■ United States v. City Sales, Ltd., et al. In 1993 and 1994, City Sales, a Cana- dian auto parts dealership, illegally imported 246 tons of CFC-12 into the U.S. They never possessed the CAA consumptive allowances and made false declarations on import invoices. The City Sales owner was sentenced to 15 months in prison. His wife was also convicted.
Placement of notices in local newspapers is another approach that regulatory agencies are using with increasing frequency. As an example, Figure 1.8 is a copy of a full-page notice placed in the Sunday Los Angeles Times, as mandated by the Los Angeles Toxic Waste Strike Force.
The sum total of the EPA’s enforcement efforts is shown in Figure 1.9. Note that the amount of fines and the number of defendants charged have grown substantially over the past 20 years. No company, no matter how apparently innocuous its opera- tions, is immune. Figure 1.10 notes the Walt Disney Corporation’s record in the late 1980s and early 1990s.
As if all this weren’t enough to heighten the anxiety of corporate managers, they may also face the ire of stockholders if the company’s stock price is adversely af- fected by compliance problems. This is a real risk, as indicated by Figure 1.11, which shows the short-term price drops of four public companies suffering through environmental incidents. The classic case in this regard is Union Carbide’s Bhopal tragedy in late 1984. The impacts of more recent asbestos claims are just as substantial.
IMPACT ON THE REGULATED COMMUNITY
What are the implications of these policies and trends for management? With the high probability of continued controversy and complexity in the EH&S arena, it is very important to avoid complacency and to pay attention to compliance matters.
Management’s ability to anticipate and respond to government and private actions aimed at addressing real or perceived EH&S problems must remain undiminished.
Yet, corporate outlays for environmental management, including those for staffing, generally have been reduced, as have expenditures for many other business activi- ties in the competitive economic climate of the last decade. Thus, many companies may be less than ideally prepared to face a future regulatory environment that will continue to be complex and onerous.
The task of business, then, in this climate of uncertainty, is to assure minimal vulnerability in compliance-related matters and to do so in the most efficient and cost-effective way. One solution to this problem is the development or vigorous maintenance of a formal EH&S audit program that evaluates compliance with regu-
Figure 1.8 Warning of Illegal DIsposal
Incidents at
Walt Disney Corporation
Date Incident Fines
7/90 Waste Disposal $550,000 4/90 Sewage Discharge $300,000 1/90 Vulture Kill $10,000 1989 PCB Transport $2,500 1988 Waste Storage $150,000
Totals $1,012,500
Figure 1.9 Trends in U.S. EPA Environment Enforcement
Figure 1.10 Incidents at Walt Disney Corporation
Trends in USEPA Enforcement Trends in USEPA Enforcement
0 50 100 150 200 250 300 350 400
77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 Defendants Charged Civil/Criminal Penalties ($MM)
99 0
Figure 1.11 Financial Impacts of Industry Incidents
Figure 1.11 (cont’d.)