Violations of environmental laws can have significant consequences, with penalties in some cases up
to $25,000 per day per violation and potentially criminal liabilities. Press releases associated with environmental enforcement can stigmatize a business with associated public relations problems. However even with the best compliance management system in place, any business operation may from time to time have issues maintaining compliance that can result in a regulatory enforcement action. Poorly managed enforcement response can have a substantial impact on your business, and in some cases can result in viable companies having to close down operations.

Many environmental regulations and permit conditions impose a duty to report a spill, release, or violation of a permit condition. Each facility subject to environmental regulation should maintain a list of these reporting obligations and train staff to identify them when they occur. Although reporting a violation does not resolve enforcement liabilities, it may substantially reduce the gravity component
of any penalty and the potential for additional violations due to a failure to report.

Environmental regulators do inspect regulated facilities to evaluate compliance. Many regulatory programs have scheduled routine inspections, priority initiative inspections to focus on specific industries of concern, follow-up inspections from prior violations, or as a result of a public complaint. A common source of complaints is from former disgruntled employees who may have intimate knowledge of a facility’s operations and provide the regulator with specific details regarding a violation.

Always be polite and respectful during a regulatory inspection and know your rights. Typically the regulators are required to identify themselves, the regulatory programs they are representing, and the specific purpose of the inspection. It is appropriate to request that the regulators wait a reasonable time for the company’s environmental compliance specialist or attorney to accompany the inspection, and if not ask if the inspection can be rescheduled to have the right people present. The regulator may respect the request, but may also insist on conducting the inspection without the appropriate people.
It is generally advisable to not deny the inspector’s right to inspect the facility, but don’t make any representations that may be wrong.

Try to keep the inspection from getting off of the specific subject of the inspection. Avoid having multiple conversations at the same time. Take good notes on what the inspectors looked at and what their issues were. If the inspector takes a sample, request a split sample for independent analysis. If necessary, follow up with supplemental information to address their questions. The inspection will conclude with an exit debriefing in which it is important to note any concerns or requests. Respond to these requests immediately, and correct any issues that need correcting.

Where possible, seek an opportunity to correct from the regulatory enforcement officer before a notice of violation goes out. Although a notice of violation is technically not an enforcement action, it does create a chain of events that must be addressed to resolve the noted violations. Any notice of violation should be responded to promptly, either to state a factual or legal disagreement with the regulator or to demonstrate compliance. Often the notice will request further actions to demonstrate compliance. It is generally best to just satisfy the request rather than dispute it. Always try to get a final resolution of the notice, preferably a determination of no further action. Notices of violation that go unaddressed can come back to life in any future enforcement action.

For substantive violations that require several steps to address compliance, it is common to enter into a consent order with the regulatory authority to outline the steps and a schedule to restore compliance. Consent orders typically come with a firm stipulated penalty for failing to meet the schedule. Note that a consent order will generally not resolve liabilities, but is simply an agreement for obtaining compliance. To the extent possible it is best to negotiate a clear path to a letter of closure or other resolution of liabilities from the regulator.

Penalties for violating environmental regulations can be severe. Typically the governing statute specifies a maximum for civil penalties per day for each violation, with the regulatory agencies having broad discretion in developing penalty policies. Usually the main policy considerations when determining civil penalties requires an evaluation of the economic benefit resulting from the violation to ensure there is no gain resulting from non-compliance, and to establish a gravity component to the penalty so as to create a deterrent from future of non-compliance. Economic hardship can also be considered, but typically requires a demonstrated ability to pay through an income evaluation of the penalized entity.

JGP Consulting provides professional services helping resolve environmental enforcement actions. Where possible, JGP Consulting works with clients to avoid formal enforcement actions through an informal resolution of the alleged violations. Where enforcement orders and penalties are sought, JGP Consulting works to negotiate an effective compliance schedule and penalties that are reasonable for each violation resolved. In determining appropriate penalties it is important to understand the applicable policies with ample consideration given to each penalty component and the associated aggravating and mitigating circumstances.