- 3 October 2006 -
Surviving and Thriving With Regulations
'Make sure your house is in order,' legal expert says

Of all the challenges facing the metal finishing industry today, perhaps none ranks higher than government regulations. Industry experts delved into this weighty topic during a special seminar, "Surviving and Thriving with Regulations," held during SUR/FIN. Donald P. Gallo of Reinhart, Boerner, Van Deuren conducted the session; Christian Richter, The Policy Group, moderated.

Gallo's presentation focused on being proactive regarding compliance with environmental laws to protect management from personal prosecution, and to protect a company from financial impact resulting from non-compliance. Also important is having a crisis-management plan in place to protect ownership, management and a company from the same pitfalls.

Following are excerpts of that session:

Current environmental laws require strict compliance; compliance is not optional—it’s mandatory in order to stay in business. To protect yourself and your business, be sure to document compliance and be prepared to verify compliance. Also, guard your permits; they are property rights and privileges. They are valuable and continue to increase in value.

Environmental laws have been around for awhile, and many companies have become lax with respect to recordkeeping and documenting compliance with permits and regulations. Under environmental laws, the burden of proving and demonstrating compliance is on the permit holder.

Specific examples:

Clean Air Act and Clean Water Act—Outline your permits. Make sure you are keeping proper records and that you are making proper notifications and certifications. Also ensure that you have required testing records.

Hazardous and Solid Waste Regulations—Are your waste characterization records older than five years? Have the waste characterizations changed? If you test, will you find out that your waste is now hazardous and you have years of improper disposal?

Violations—Frequently result in fines based on the gravity of the violation and valuation of the benefit for not being in compliance.

Bottom line: "Ensure that you have a program and keep proper records," Gallo said. "Also, be careful about 'overlay' lawsuits."

It's also the responsibility of the business to report violations—with a caveat. "If you report violations, make sure your own house is in order, because the EPA can then 'cross-inspect' you," Gallo explained.

U.S. EPA Audit Policy
The purpose is to enhance protection of human health and the environment by encouraging regulated entities to voluntarily discover, promptly disclose and expeditiously correct violations of Federal environmental requirements.

Final Policy Concerning the Occupational Safety and Health Administration's Treatment of Voluntary Employer Safety and Health Self-Audits took effect July 28, 2000. Policy applies to audits that are voluntary, systematic, documented and objective reviews of operations and practices to ascertain compliance. Note: Several states have enacted environmental audit privilege and/or penalty immunity laws (see sidebar).

Incentives: Elimination or substantial reduction of the gravity component of civil penalties; determination not to recommend criminal prosecution of the disclosing entity; EPA will not request regulated entities’ voluntary audit reports to trigger Federal enforcement investigations.

U.S. EPA Final Policy Incentives for Self-Policing (50 FR 46504, 1986) encourages companies to identify and remedy their own violations by agreeing not to request audit results. EPA's enforcement efforts are influenced by a company’s efforts to avoid and correct violations, prevent recurrence, and report issues. U.S. Department of Justice Policy on Environmental Audits (1991) contains assurances that voluntary compliance efforts will not be used against companies and will be given favorable consideration.

U.S. EPA Final Policy Incentives for Self-Policing: Discovery, disclosure, Correction and Prevention of Violations (60 FR66,706): Enhances protection of human health/environment by encouraging regulated entities to voluntarily discover, disclose, correct and prevent violations of federal environmental regulations.

Revised Final Small Business Compliance Policy (65 FR 19,630, May 200): Promotes environmental compliance among businesses with 100 or fewer employees by providing incentives to discover and correct environmental problems.

It’s important, Gallo said, to stay updated. "If you're a job shop or manufacturer, your systems change to accommodate new products," he explained. "You’re in a position that you’re changing systems all the time."