The ever-evolving COVID-19 crisis continues to pose significant challenges for industrial enterprises across the United States. Until very recently, the engines of industry continued to hum while the broader world wrestled with this unprecedented public health crisis. However, with growing constituencies across the public and private sector calling for more aggressive action on social distancing and with states now beginning to issue strict shelter-in-place orders, more and more manufacturing facilities are closing their doors and idling their operations. To make things even more challenging, these decisions are being made with no real idea as to whether the ordered shutdowns will last for days, weeks or months. Amidst this uncertainty and with little notice, companies must confront and effectively address immediate environmental compliance and risk management issues and considerations arising from their rapidly changing business conditions.
COVID-19 orders and shutdown mandates raise immediate regulatory questions that must be addressed. Shutdown orders and the cessation of manufacturing operations – be they government mandated or voluntarily imposed – raise a number of important environmental regulatory questions, including:
- How will ongoing remediation projects be affected by shutdown orders and the limited availability of third party contractors?
- What steps need to be taken to manage environmental risks at idled plants including with respect to accumulated hazardous wastes, management of waste treatment ponds and lagoons, and maintenance of secondary containment and stormwater controls?
- How are facilities going to continue to comply with air, water and waste permitting requirements as EHS staff and resources become increasingly scarce?
These questions must be promptly asked and answered as companies must presume that existing environmental regulatory requirements will continue to apply to temporarily shuttered operations subject to, as recommended more fully below, a detailed review of potential relief afforded under applicable permits or regulations or pursuant to clear pronouncements by government agencies in response to the extraordinary circumstances facing these enterprises today.
What can we expect from federal and state environmental agencies? As facilities consider these critical environmental compliance questions, the operating assumption must be that U.S. EPA and state environmental agencies will expect continued compliance regardless of any COVID-19-related operational disruptions or facility shutdowns. Importantly, all of the state shelter-in-place orders issued to date appear to contemplate the continuation of essential environmental compliance services at idled manufacturing facilities. These services either fall within defined “essential business operations” (which generally include building management and maintenance operations and waste management services) or otherwise constitute exempt “minimum basic operations” required to maintain the value of the business or ensure security of company facilities and assets.
The messaging from U.S. EPA and the states on environmental compliance expectations has not been consistent, but nonetheless reflects an expectation of continued adherence to regulatory obligations. Pennsylvania, for example, has issued written guidance making clear that “all permittees and operators are expected to meet all terms and conditions of their environmental permits, including conditions applicable to cessation of operations” during the crisis. California and Illinois, two states that have issued shelter-in-place orders in recent days, offer no express relief or accommodations as part of their messaging to state businesses and industrial locations. For its part, U.S. EPA is similarly silent on the availability of relief from regulatory compliance obligations in connection with federal COVID-19 mandates for affected businesses, focusing its messaging instead on FIFRA compliance related to surface disinfectants and transmission of COVID-19 in drinking water and wastewater. A few states, Texas and Oregon in particular, have acknowledged that some relief may be available through the exercise of enforcement discretion where noncompliance is unavoidable due to impacts from COVID-19. The Texas Commission on Environmental Quality (TCEQ) has even set up a special email address to field and timely respond to these requests.
Essential elements of an effective Environmental Action Plan. Successfully navigating the environmental challenges resulting from COVID-19 requires thorough consideration and planning, all in a time frame that keeps pace with the daily evolution of this crisis. To that end, we advise our industrial clients to pursue the following essential steps in implementing their COVID-19 environmental action plans:
1. Identify your COVID-19 Environmental Team. The first task must be to identify the Environmental Team charged with managing environmental compliance obligations and risks during extended operational disruptions or shutdowns. For most companies, the Environmental Team will include both corporate and plant EHS professionals. Consideration must also be given to necessary third-party consultants and their availability to the Team. Any questions regarding the effect of shelter-in-place orders or other company-mandated work restrictions for internal and external team members must be reviewed and addressed immediately – if necessary, through outreach to state officials – to ensure the availability of resources during the crisis.
2. Review your affected facilities and environmental compliance and risk considerations. The Environmental Team must carefully review and assess the compliance challenges and potential environmental risks implicated by a prolonged shutdown of operations. Some examples of environmental risks include: Will facility disruptions cause exceedances of hazardous waste generator storage limits? What actions will be necessary to operate, maintain and inspect product storage and waste management units and essential pollution control systems and equipment? What impact will operational disruptions have on ongoing remediation or long-term monitoring programs and potential risks to the public or the environment? What permit obligations are triggered by the idling of plants and what regulatory limits and monitoring and reporting requirements will continue to be imposed on these operations? Without question, companies will be obligated to ensure that no harm to public health or the environment occurs during these transitional periods or shutdowns. A careful review of operations will help prioritize the mobilization of constrained resources to the greatest potential risks and most challenging operational issues.
3. Understand your rights and obligations under applicable permits and government orders. Facility environmental permits and government cleanup orders impose obligations on operators, including during periods of shutdown or changes in operations. The terms of these permits often offer relief from certain compliance requirements in the face of unanticipated events or circumstances. For example, Superfund cleanup orders typically include force majeure provisions excusing compliance with certain order requirements. Likewise, Clean Air Act and Clean Water Act permits often include “emergency condition” or “upset” provisions and other force majeure-type terms that offer defenses to enforcement for failed compliance under appropriate circumstances. How these provisions might apply to circumstances and operational challenges triggered by COVID-19 mandates should be considered carefully in consultation with legal counsel given the unprecedented nature of this crisis. Regardless of these applicability questions, the ability to take advantage of any such regulatory relief will most certainly require adherence to the procedures laid out in the applicable permits and orders, including prompt notice to regulators of any unexpected impediments to compliance. Diligence in completing and documenting these pre-conditions to any requested relief must therefore be a priority.
4. Communicate with the regulatory authorities to the extent possible. Communication with the applicable environmental agencies will be critical to the success of any efforts to obtain relief, if necessary, from compliance obligations. The starting point is to ensure that all notice obligations in permits and orders are timely satisfied when requesting relief. Some states are also considering the extension of compliance deadlines for certain industry-wide required reporting. TCEQ, for example, has already announced a 30-day extension of its March 31st deadline for certain air emissions reports. We expect other states to issue similar extensions. Engaging with the regulators on these deadlines will ensure the maximum flexibility in addressing compliance issues. While communicating with the regulators is always good practice, we are already experiencing challenges contacting agency personnel, who themselves are on restricted schedules. In these cases, email and other correspondence to confirm outreach is important to document diligence in this agency engagement and compliance with notice and other requirements.
5. Act reasonably and document your environmental response and compliance actions. These are clearly uncertain times, and companies are facing challenges across their businesses and operations that they likely never fully contemplated in the best of contingency planning. How the consequences of COVID-19 will be resolved under environmental permits or “act of God” provisions of the environmental statutes are legal questions for another day. The priority for today must be on taking the necessary steps to (i) identify potential environmental risks and exposures, (ii) allocate the available resources to effectively managing these risks to public health and the environment, (iii) comply with permits conditions, including those offering relief under these extraordinary circumstances, and (iv) engage as responsibly as possible with the regulators. Companies will be judged on the reasonableness and diligence of their actions under the circumstances. Documenting these actions along the way is therefore necessary to provide the basis for defenses from any post-crisis enforcement that might arise.
Baker McKenzie’s Environmental Group is available to answer any questions you might have and provide legal support and counsel as you navigate the environmental issues that arise as the COVID-19 crisis continues to evolve. Please reach out to our COVID-19 contacts should you need further assistance.