Phillips Law Firm Blog

Employers have been known to ask employees to violate environmental laws. Sometimes, the request occurs because of an honest misunderstanding of the law and should be considered an innocent mistake. Less scrupulous employers have been known to ask employees to perform an activity that is in violation of an environmental law because it is a cheaper way of doing business. In either case, the employee faces both a moral and a legal dilemma. Questions like, "Could I go to jail for this?" or "If I refuse will I be fired, or passed over for a raise or promotion?" and "Who is responsible if someone gets hurt?" often haunt the employee. As he wrestles with his conscience, the employee may not know where to turn, or what to do. The employee may not even be certain that what the employer is requesting is illegal. The employee may only suspect that the activity is illegal because of something he heard, or something he read. In such situations, the employee must know for what he has legal responsibility, and for what his employer has legal responsibility. The employee must also know what to do if he finds that his employer is retaliating against him for not violating the law.

The law holds that a person responsible for compliance with a law must also answer for violations of the law. An employee who has no responsibility for compliance with a law, when directed to violate the law, is usually not held responsible for the violation unless the employee knew or should have known that his conduct was illegal. For example, an employee who uses an illegal type of paint when ordered to do so would probably not be held responsible for a violation of the Clean Air Act if the employee was not responsible for maintaining company compliance with the Clean Air Act. However, an employee performing midnight dumping of drums of used solvent into a vacant field when ordered to do so could be held liable since such activity is without question known to be illegal.

If a supervisor asks an employee to perform an act, such as using a paint that the employee believes to be illegal, the employee should state the concern to the employer. He should specifically tell the person requesting the activity that the environmental laws could prohibit the requested activity. The employee should determine if the person making the request is responsible for environmental compliance. If the person making the request is not responsible for environmental compliance, the employee and the person making the request should consult the person with responsibility for environmental compliance before proceeding. The employee should state that he is only requesting the consultation to protect the company. If the person making the request refuses to consult with the company's environmental compliance officer, or if the person making the request happens to be the company's environmental compliance officer, the employee should remind the person that if EPA later determines that the activity was illegal, the company and the person ordering the illegal activity will be liable, but usually not the employee who simply follows the order.

If the person ordering the activity states that he knows the activity is illegal, but orders the employee to perform the activity anyway, the employee has a difficult decision to make. If he continues, he is committing a knowing violation of the law, possibly exposing himself to criminal sanctions. If he does not continue, he is subjecting himself to retaliation by his employer for not following directions, albeit illegal directions. Congress contemplated such a problem and passed "whistle-blower" laws to protect the employee. The Clean Water Act (33 U.S.C. § 1367(a)), the Clean Air Act (42 U.S. C. § 7622), the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9610), the Safe Drinking Water Act (42 U.S.C. § 300(j)-9(i)), the Resource Conservation and Recovery Act (42 U.S.C. § 6971), and the Toxic Substances Control Act (15 U.S.C § 2622) all contain whistle-blower provisions. Other state and federal laws also contain whistle-blower provisions that could be applicable depending on the specific situation.

Under the whistle blower laws, no employer may discharge or otherwise discriminate against any employee concerning his compensation, terms, conditions, or privileges of employment because the employee reported, or is threatening to report suspected illegal activity of the employer. Such whistle-blower provisions promote a working environment in which employees are relatively free from the debilitating threat of employment reprisals for publicly alleging violations of laws protecting the environment. The whistle-blower laws encourage employees to aid in the enforcement of the underlying laws by allowing employees to raise legitimate concerns through protected procedural channels. It is usually not necessary for the employee to know that the activity is illegal, provided the employee substantiated the allegation and was not merely harassing the employer. The courts scrutinize an employer's motivation for his actions regarding an employee who reports, or threatens to report a violation. Hence, after an employee "blows the whistle," the employer must show that a legitimate reason exists for taking action against an employee. Even if an employer had compiled enough information to terminate an employee, but failed to do so until the employee reported a violation of an environmental law, the whistle-blower statutes would protect the employee from being terminated as a result of reporting the violation of the environmental law.

In the case of Passaic Valley Sewerage Commissioners v. U. S. Department of Labor, 992 F. 2d 474 (1993), the third circuit court of appeals extended the whistle-blower protection to reports made internal to an organization. Thus, an employee can make his initial report to upper management where he feels that such reporting could result in correction of the illegal activity. There is no legal requirement that the employee start within the organization to report the alleged illegal activity. However, some employment contracts require that an employee report all grievances internally before being reported outside the company. It is important that the employee be aware of such requirements since disciplinary action for not following company procedures are at least arguably not covered by the whistle-blower statutes.

Whistle-blower statutes do not apply to an employee who, acting without direction from his employer, deliberately violates the law. Thus, an employee who initiates the violation and then threatens to report the "company's" illegal activity to save his job when the employer finds out, cannot rely on the whistle-blower statute for protection. It is also important to remember that the law affords no protection to a person who sits on his rights. An employee only has a limited amount of time to file a claim under the whistle blower statutes. For example, an employee must file within thirty days under the Clean Air Act's whistle-blower statute.

I recommend the following course of action to any employee who is asked to perform an illegal activity:

1) If the employee does not know, but merely suspects the activity to be illegal, question the person making the request as to the legality of the activity. The employee should ask to speak to the environmental compliance officer "to protect the company." If possible, the employee should try to have a witness present during the conversation. If the employer tells the employee that the activity is legal, then the employee should perform the task. The employee is not the person responsible for making the determination of compliance with the law.

2) If the employee knows that the activity is illegal, but the employer orders the employee to perform the illegal activity anyway, the employee should only perform the task if retaliation is likely, and performing the task is not likely to put others in danger. If possible, the employee should try to have a witness present during the conversation. On the employee's own time, the employee should write down the sequence of events leading up to the violation, and all details related to what violation occurred. The employee should pay particular attention to who ordered the violation, witnesses, times, dates and details about the violation in his writing. When practical, the employee should report the situation to management and/or EPA for resolution. Reporting is important since it negates any inference that the employee was the person initiating or responsible for the illegal activity.

3) If the illegal activity is one that could result in someone being hurt, the employee should simply refuse. An employee should never knowingly endanger anyone by creating an environmental hazard. The employee should report the situation to management immediately before someone with less integrity performs the activity. If management does not take immediate steps to prevent the illegal activity, immediately report the situation to EPA. If the employee believes that the activity endangers employees of the company, the employee should also report the situation to OSHA. OSHA gives any matter in which there is an imminent danger of employee harm first priority. Furthermore, under OSHA's interagency sharing of information agreement, OSHA will cooperate with EPA by providing EPA with information regarding violations of environmental law. If the company retaliates against the employee for reporting or threatening to report the illegal activity, the employee should immediately seek legal assistance. Congress designed the whistle-blower statutes to protect and to compensate employees in such situations, but the employee may only have thirty days in which to act after retaliation occurs.

In addition, I offer the following advice to employers. When any employee comes forward with an allegation that a supervisor asked the employee to violate the law, treat the matter seriously. Investigate the facts and the law. If the supervisor did request that the employee violate the law, try to determine if the supervisor understood that the action was illegal. If he did, consider the supervisor's value to the company compared to the potential environmental liability your company could have faced. Furthermore, if your company or the supervisor does anything which might even appear to be retaliatory against the employee who reported the incident, the company is again exposed to liability under the whistle-blower statutes. The best businesses are those that find cost effective ways to comply with the law, not those that look for employees who are willing to violate the law.

You are the owner of Chromers and Platers, Inc., a business that you started thirty years ago and have grown to employ sixty people on a full time basis. You have diligently tried to comply with the environmental laws over the years, but with the myriad of paperwork associated with the environmental laws, you really are not sure if you have been successful.

Recently, you decided to sell the business, but before listing the business for sale, you decided to have a compliance audit of your facility completed by a local environmental consulting company. After the audit, the environmental consultant revealed that your company was in violation of several different environmental laws. The violations are mostly caused by failure to maintain appropriate records. None of the violations would result in a criminal prosecution, but some of the violations could result in a significant civil penalty if discovered by U.S. EPA. You immediately make plans to ensure that future violations will not occur. However, selling the business with the potential for U.S. EPA to come in and levy large civil penalties against your company will certainly affect the selling price.

Unsure of what to do, you contact an environmental attorney for assistance. The attorney explains that since you are aware of the past violations and the possibility that an enforcement action could be brought against the company because of the violations, you must disclose the violations to any potential buyer. If you choose not to disclose the past violations, the buyer could sue you for fraud if U.S. EPA brings an enforcement action against the company after you sell. The attorney explains that his recommendation is for you to report the violations to U.S. EPA yourself. Your attorney explains that under a new U.S. EPA policy, if you self-report the violations, you may be entitled to a complete waiver of any penalty that would otherwise be assessed against the company.

Your attorney explains that on May 23, 1996, U.S. EPA implemented one of the twenty-five regulatory reform initiatives announced by President Clinton on March 16, 1995. The regulatory reform initiative recently implemented was EPA's Policy on Compliance Incentives for Small Businesses and implements, in part, the Executive Memorandum on Regulatory Reform, issued on April 21, 1995, by President Clinton.

The new policy sets guidelines to reduce or waive penalties for small businesses that make good faith efforts to correct violations under most EPA statutes. The policy does not apply when public health or the environment is seriously threatened, or when the violation involves criminal conduct. Since the violations at your business are unintentional paperwork violations that did not involve criminal conduct, your attorney explains that your case is a good candidate for a penalty waiver under the new policy.

For a facility to be eligible for a penalty waiver, the company must be a "small business." The policy defines a small business as a company that employs one hundred or fewer persons on a company-wide basis. Furthermore, a facility must demonstrate a good faith attempt at complying with the environmental laws. Facilities can demonstrate good faith in two ways: either by conducting a self or third-party compliance audit and promptly disclosing and correcting the violations or by getting on-site compliance assistance from a state, federal or other government-sponsored compliance assistance program. Assuming the company discovered the violation as part of a self-compliance audit, the company must report the violation promptly to U.S. EPA in writing.

The violation itself must be a first time, non-criminal violation that does not pose a significant threat to public health, safety or the environment for the policy to apply. For purposes of a first time violation, within the past three years the facility must not have received or been subject to an information request, warning letter, notice of violation, field citation, citizen suit or other enforcement action or received penalty mitigation pursuant to the new policy for the current violation and, in the past five years, has not been subject to two or more enforcement actions for violations of environmental requirements.

In addition, the company must correct the violation remedy any harm caused to the environment within 180 days of being discovered, or 360 days if the company must install pollution prevention equipment. If a business meets all the criteria but takes additional time to correct the violation or, in the rare event that a business obtains a significant economic benefit from the violation, U.S. EPA will waive up to 100 percent of the gravity or punitive portion of the penalty, but may seek the amount that company saved through its non-compliance. According to U.S. EPA, this will eliminate any economic advantage that violators have over those companies that do comply with the law.

You explain to your environmental attorney that you believe your company meets all the requirements. You employ less than one hundred people, attempt in good faith to comply with the environmental laws, discovered the violations during a self-audit, and have never been party to a prior enforcement action. In addition, your company received no economic advantage from the violation, did nothing criminal, and never harmed the environment, nor did your company pose a significant threat of harm to the environment. Under the circumstances, your company should be eligible to have the entire penalty that would otherwise be applicable to your situation waived by U.S. EPA after you report and correct the violations. You feel relieved; finally, a policy from U.S. EPA that could actually improve your company's profitability.

My advice to clients who are performing self-audits is to be aware of the latest environmental policies coming out of U.S. EPA. U.S. EPA's latest policies are designed to save you money. However, U.S. EPA has no track record under the new policy, and many of the criteria necessary for a company to be eligible for a penalty waiver are subjective. I would never recommend that any company cover-up its violations of the environmental laws. However, proceed with caution when reporting violations to U.S. EPA and remember that you are making admissions that you will be held accountable for if U.S. EPA later decides that your company is not eligible for a penalty reduction. What is more important, if U.S. EPA decides that the conduct is a criminal violation, you may have made the admission necessary to prosecute the case against you.

In addition, policies come and policies go for various reasons such as court challenges, election year campaign promises, and federal budget balancing considerations. U.S. EPA's new policy on Small Business Compliance Incentives is a good idea, in my opinion. However, it has not yet withstood the test of time. As for now, if your company has discovered violations that must be reported, such as in this case due to a pending sale of the business, be aware that President Clinton has promised relief to those small businesses who meet the above criteria. As for large businesses, you may want to write to the President and ask him why his new policy does not apply equally to you.

You own and operate Ace Plating and Painting, Inc. Your company specializes in coating materials for the secondary automotive parts market. You rechrome bumpers and grills, and strip and paint body parts for antique cars. You have been operating the business for over twenty years and have become one of the Midwest's largest secondary automotive refinishing suppliers. Business is good, and your reputation for being a quality supplier keeps it that way.

Your facility has an air permit for the emission of particulates and volatile organic chemicals. Your company has tried to comply with its permit. Occasionally, your company has problems with its air pollution control equipment and there will be times when the facility is not in compliance. However, because you are not required to monitor your results continuously, you take the position that there is no evidence to show that you have violated your air permit. When you are required to monitor, you make certain that all of your pollution control equipment is working before you collect the necessary test date required by your air permit. While the ethical issues raised by this approach could be troubling if you really stopped to ponder, legally, you feel like you are on solid ground. You have operated this way uninterrupted for several years without a problem, until yesterday.

Yesterday, your company, Ace Plating and Painting, Inc. received a Notice of Intent to Sue pursuant to the Citizen Suit provision of the Clean Air Act. You are outraged. "They've got no proof that I ever violated the Clean Air Act," you say to yourself. "There's no definitive evidence that I violated my air permit. A good strong letter from my lawyer should shut these people up," you say, and off you go furiously to your lawyer's office.

Your attorney reviews the notice of intent to sue letter, and asks you to explain the allegations in the letter that your facility emits "obnoxious and hazardous odors," and "particulates that settle on automobiles, sticking thereto and ruining the automotive finish." Your attorney further asks you to explain the photographs that your neighbors were kind enough to enclose with their Notice of Intent to Sue showing your air emission stack belching black smoke. Your response is quick and definitive. "They can't prove a thing. All of my monitoring results show that I am in complete compliance with my air permit," you say. "There is no definitive evidence proving that I have violated any of EPA's laws," you remind your lawyer.

Your lawyer tells you that if he is too defend you, you must be honest with him. You proceed to tell him confidentially that your pollution control equipment does not work all of the time, but that it always works on days when you perform tests to demonstrate compliance with the terms and conditions of your air permit. You admit that occasionally your factory does belch black smoke, but this is just the type of business you own. To install equipment that would capture every such release would be cost prohibitive. Similarly, you explain that the cost of installing new VOC capturing equipment that would work continuously as needed would also be cost prohibitive. Your philosophy has been that if the other side cannot prove the violation, which your data shows they cannot, then you intend to keep operating as you have for the last ten years. When you finish, your attorney sighs and says that you used to be correct. Until February of 1997, the citizens probably could not have pursued a citizen suit without test data showing that Ace Plating and Painting, Inc. violated the terms of its permit. However, in February 1997, EPA changed the law and made it a lot easier for citizens to sue and win in court based on information regarding violations obtained from sources other than your monitoring data.

Your attorney explains that EPA promulgated another regulation in 1997 that will aid citizen suits. On February 24, 1997, EPA promulgated a final version of the "any credible evidence" rule, 62 Fed. Reg. 8314. The any credible evidence rule specifically amends four different parts of the Code of Federal Regulations, 40 C.F.R. Parts 51, 52, 60, and 61, and allows the use of any credible evidence in enforcement actions brought under the Clean Air Act by EPA, state enforcement agencies, or citizens. The key language added by the rule states that nothing in those regulations "preclude[s] the use, including the exclusive use, of any credible evidence or information, relevant to whether a source would have been in compliance with applicable requirements if the appropriate performance or compliance test procedures or methods had been performed." Previously courts applying this rule would only find reference test data admissible as evidence in enforcement suits. The any credible evidence rule establishes that nonreference test data may also be admitted as evidence in an enforcement action, including a citizen suit action.

Your attorney explains that even beyond the basic impact of the rule in changing what constitutes compliance under many standards, certain portions of EPA's preamble to the new rule raises additional concerns about how the new rule may be used in enforcement actions. In particular, Agency officials had previously stated that credible evidence could properly be used to prove a violation only if the plaintiff could demonstrate "a strong correlation between reference test results and the credible evidence in question." In otherwords, the credible evidence had to correlate with test results. However, nowhere in the preamble to the any credible evidence rule is there a statement that the role of credible evidence is limited in this manner. Instead, the preamble refers to the specified reference test method as merely constituting a "benchmark" against which other data or methods may be compared when they are used to establish that a violation has occurred. The preamble emphasizes that "by law the Agency is limited only by general evidentiary rules in what it can use to prove a violation alleged in an enforcement action." 62 Fed. Reg. 8320. Also troubling is the portion of the preamble that states if credible evidence indicates the existence of possible "deviations" from a limit, a source may "be out of compliance with an applicable requirement even though the unit's permit-identified data indicates compliance." 62 Fed. Reg. 8320. In other words, your attorney explains that even if your data indicates that you are in compliance, the evidence to be produced by the citizens indicating that you are not in compliance can be used to prove violations if it is credible. As your attorney looks at the photographs sent by the plaintiffs, he sighs and mumbles to himself, "This could be tough to discredit." Furious, you tell your attorney that you are willing to upgrade your equipment if that will make the lawsuit go away. Unfortunately for you, your attorney explains that the Supreme Court decided this issue in the case of Gwaltney v. Chesapeake Bay Foundation, 484 U.S. 49 (1987). The issue in Gwaltney was whether the citizen suit provisions of the Clean Water Act, permitting private citizens to bring suit against any person alleged to be in violation of the Act, required that a defendant be violating the Act at the time of suit. The Court concluded that the CWA did not permit citizen suits for wholly past violations. However, the Court stated that the provisions required that a citizen plaintiff allege a state of either continuous or intermittent violation. In other words, there must be a reasonable likelihood that a past polluter will continue to pollute in the future. In your case, the attorney explains, simply upgrading the equipment will not be enough unless you can upgrade within sixty days from the Notice of Intent to Sue, and the upgrades guarantee that there is no possible way that the plant could operate in violation of the limits set by your air permit.

You look at your attorney and state, "No system can guarantee that." Your attorney in response simply states, "And that is why you are likely to lose. There is credible evidence of past violations, and no way to insure that future violations will not occur."

Be advised that EPA has lowered the standard to bring citizen suits and win. Under the new "Any Credible Evidence" rule, enforcement actions, including citizen suits, are a lot easier to win. Further, unless it can be demonstrated that the violation will never reoccur, they are even more difficult to stop. The new rule is referred to as the "Any Credible Evidence" rule or ACE rule. The "ACE" rule will undoubtedly become the ace in the hole for citizens pursuing enforcement actions against companies like the one in this article, Ace Plating and Painting, Inc.

Your company, Deep Dutch Metal Finishing Company ("Deep Dutch") operates an electroplating operation in Deep Dutch, Illinois. Deep Dutch's electroplating operation generates wastewater that is treated before discharging into the Publicly Owned Treatment Works, the "sewer system." Your company has operated at its current location since 1969. In 1995, your company learned that the factory across the street was closing. You learn that the closing factory's facility is for lease, and with its less expensive rent, you calculate that you can easily save about forty thousand dollars per year. The cost of moving will be made up in the reduction of the lease payments for the first year.

The move went smoothly, with only a minimal impact on production. You moved your electroplating lines one at a time so that your production was never shut down completely. After the move, you notify everyone that your address has changed from 1953 Industrial Boulevard to 1948 Industrial Boulevard. Your company disassembled and reassembled its pretreatment equipment for its wastewater and moved it across the street as well. Instead of watching the sunrise, you now watch the sunset, and instead of discharging pretreated wastewater on the east side of the street, you now discharge your pretreated wastewater on the west side of the street. Other than that, your operation is exactly as it was before the move. Everything was going according to plan, until yesterday. Yesterday, you received a notice in the mail that your local Water District expected you to upgrade your wastewater pretreatment equipment as a "new source" of pollution. You are stumped, and anticipate that a clerical error has occurred.

The day following receipt of the notice, you notify the Water District to determine why the Water District is demanding that you upgrade your pretreatment equipment. After a rather long and somewhat heated exchange with a technical staff employee of the Water District, you eventually learn that after Deep Dutch's move, the Water District is taking the position that Deep Dutch's operation is subject to more rigorous treatment standards now as a "new source" with respect to its discharges into the sewer system. According to the Water District, as a result of its move to a new location, Deep Dutch's operation became a "new source" under U.S. EPA's regulations rather than an "existing source," which it had been classified as prior to its move. The "new source" classification subjects your manufacturing operation to stricter waste treatment standards than the "existing source" classification. Just before telling the Water District employee exactly what you thought of his opinion, you explained that you believed Deep Dutch remained an "existing source" because it had merely moved its existing equipment from one building to another and this in your opinion should not be considered a "new source."

The Water District immediately initiated a series of administrative actions before the Water District's Board of Commissioners to determine whether Deep Dutch was subject to the Metal Finishing Point Source Category (a pretreatment standard for "new sources"), 40 C.F.R. § 433.17, or instead, as you maintain, to the less stringent Electroplating Point Source Category (a pretreatment standard for "existing sources"), 40 C.F.R. § 413.14. Because the Water District is required by law to enforce U.S. EPA's regulations, U.S. EPA's regional office, Region V, took an interest in the Water District's administrative actions relative to Deep Dutch's Operations and issued a letter in which Region V gave an informal interpretation of the applicable regulations (an "interpretative ruling"). The interpretative ruling indicated how Region V, as opposed to the Water District, would characterize your operation in the course of independent review, such as during an audit of the Water District's enforcement program. In its interpretative ruling, Region V concluded that Deep Dutch became a "new source" as defined by the Clean Water Act and 40 C.F.R § 403.3(k) once it moved across the street.

The Water District, not about to do anything contrary to an interpretive ruling from Region V, immediately concludes that Deep Dutch's new location is a new source and orders that Deep Dutch must meet the new source wastewater standards. This ruling could cost Deep Dutch over five hundred thousand dollars in equipment and operating costs over the next several years. In response, you immediately contact U.S. EPA's Region V headquarters seeking a hearing to reconsider the interpretive ruling from Region V. Region V responded by confirming its initial determination that Deep Dutch's operation at 1948 Industrial Boulevard constitutes a "new source" under the law. When Region V confirmed its interpretive ruling that your move from 1953 Industrial Boulevard to 1948 Industrial Boulevard constituted a "new source" under the law, you decide to hire an attorney and fight Region V's interpretation.

You arrive at your attorney's office and explain the problem. You want your attorney to file suit against U.S. EPA and get Region V's interpretative ruling reversed so that the Water District will allow your plant to be classified as an existing source. You emphatically explain to your lawyer that Deep Dutch is not a "new source" and should not be subject to the more stringent effluent limitations set forth in 40 C.F.R. § 433.17. Your attorney cringes when you tell him the facts and what you want.

Your attorney explains that Congress passed the Federal Water Pollution Control Act, 33 U.S.C. §§ 1251-1387, also known as the Clean Water Act, in order "to restore and maintain the chemical, physical, and biological integrity of the Nation's waters." 33 U.S.C. § 1251. To this end, Congress established a comprehensive regulatory scheme to control the direct and indirect discharge of waste and pollutants into navigable waters. To curtail indirect discharges into sewer systems and POTWs, U.S. EPA promulgated pretreatment standards for various industrial categories. 33 U.S.C. § 1317. These "categorical" pretreatment standards typically specify the maximum amounts of certain pollutants that a source in a particular industrial category may discharge into a sewer via its wastewater. Generally, "new sources" must adhere to more stringent pretreatment standards than "existing sources," e.g., compare 40 C.F.R § 433.17 (pretreatment standards for new sources) with 40 C.F.R § 433.15 (pretreatment standards for existing sources). According to U.S. EPA's logic, new sources are subject to more rigorous controls because, as a practical matter, it is much easier to design and build new equipment to meet the tougher standards than it is to upgrade existing equipment to meet those same standards.

Your attorney explains that the statute granting a court jurisdiction to review EPA's decisions, Section 509(b)(1) of the Clean Water Act, 33 U.S.C. § 1369(b)(1), does not afford the court jurisdiction to review the agency's informal interpretative rulings such as the one issued in your case. You are astounded, the Water District will not change its position regarding your status as a "new source" unless you can get Region V to change its position, and your attorney is telling you that you can't even sue U.S. EPA to determine the correctness of Region V's position. Your attorney explains that in determining if a court has jurisdiction, the question the court must address is whether Region V's interpretative ruling constitutes a reviewable issue under the law. If it does not, the courts have no jurisdiction. In American Paper Institute v. EPA, 882 F.2d 287 (7th Cir. 1989), Region V issued a policy statement concerning dioxin discharges from pulp and paper mills. The American Paper Institute sought review of Region V's policy statement, believing it to be too onerous. U.S. EPA argued that the court system had no jurisdiction over the matter since the policy statement was not reviewable under Section 509(b)(1)(E) of the Clean Water Act, which at the time provided: "Review of the Administrator's action . . . in approving or promulgating any effluent limitation or other limitation under section 1311, 1312, or 1316 of this title . . . may be had by any interested person in the Circuit Court of Appeals of the United States."

The court agreed that it had no jurisdiction to determine the matter and determined that Section 509(b)(1)(E) did not cover Region V's policy statement. The court reasoned that "promulgation" means issuing a document with legal effect. Region V's policy statements, while issued to warn, threaten and possibly harass, have no legal effect. The court in American Paper Institute went further to hold that Region V's policy statement was not a "limitation" within the meaning of Section 509(b)(1)(E) because it was advisory, and thus it had no independent legal effect. Id. at 289. Your attorney explains that the same reasoning that the court applied to Region V's "policy statement" in American Paper Institute applies with equal force in the present case to Region V's "interpretative ruling." Since Region V's interpretative ruling has not been adopted by U.S. EPA, the ruling cannot be considered the "Administrator's action." Second, like the policy statement at issue in American Paper Institute, Region V's interpretative ruling was not "promulgated." Third, the interpretative ruling is not an "effluent standard, prohibition, or pretreatment standard." Instead, the ruling is Region V's opinion concerning which pretreatment standard U.S. EPA would deem applicable to Deep Dutch based on whether Deep Dutch is a "new source" or an "existing source." Policy statements do not appear in the Federal Register and will not be codified in the Code of Federal Regulations. A policy statement simply tells the regulated community how U.S. EPA's Regional Office thought it might react to particular proposals. However, as stated by your attorney, "Telegraphing your punches is not the same as delivering them." A lawsuit against U.S. EPA to force it to withdraw Region V's interpretive ruling would clearly and quickly be thrown out of court.

You are furious. You tell your attorney that you intend to move your operation back across the street where you were an "existing source." Your attorney sighs and reminds you that after you left, any business relocating in your former location would be subject to the "new source" standards. Your attorney simply looks at you and says, "No matter where you go, there you are." After you moved, you will always be a "new source."

You are the President and owner of Barrel Finisher's Inc., a drum recycling company. Your company has been operating at the same location since World War II. Your company receives metal 55-gallon drums from companies, removes the contents left in the drum and then paints the drums for use again. Your company has its share of environmental problems from the past operating techniques of its founders. Initially, the contents of drums brought into the plant were washed out with a cleaning solution that was discharged to a settling pond where it was treated on site. Naturally, this created a toxic and hazardous waste due to the multiplicity of small amounts of chemicals left in the drums. The groundwater and the soil at your plant are contaminated with solvents, pesticides, metals and petroleum products from the more than fifty years of industrial activity at the site.

U.S. EPA is well aware of your site, and has repeatedly requested that you voluntarily enter into an agreement for the necessary work to protect human health and the environment from the presence of the many contaminants at the site and in the groundwater. However, you view the need to spend money on past environmental problems differently than U.S. EPA. You see the problem as one that strictly happened before the environmental laws and regulations were in effect. Furthermore, your plant is located in an industrial park where all of the land is contaminated, not just your land. In addition, nobody within three miles of your plant uses the groundwater because everyone knows the water is too polluted to drink. The bottom line is, you do not share U.S. EPA's sense of urgency as to any type of environmental restoration project at your plant. You expect that it will be at least another five years before U.S. EPA sues you in court to force you to clean up the property. With all of the court delays in today's legal system, you expect that you will be retired before you have to deal with the removal of any contaminated soil or groundwater from your property. You had everything figured out, until yesterday.

Yesterday, you received via Certified Mail from U.S. EPA something called a unilateral administrative order requiring that you immediately begin the environmental restoration of the contaminated soil and groundwater at your plant site. The order states that if you do not perform the tasks required by the terms of the order, you can be assessed $25,000 per day in penalties, and if you willfully violate the unilateral administrative order, you can be assessed three times the cost of clean up as a punitive fine. You had never heard of such a thing. You thought only a court could issue an order, and you have not been sued so how could you be subject to an order. You decide that this cannot possibly be legal, so you call an environmental attorney to see how best to avoid the U.S. EPA's unilateral administrative order. What you learn is very sobering.

The attorney that you hire to get you out of the unilateral administrative order explains that U.S. EPA prefers to obtain private-party response action through the negotiation of settlement agreements with parties willing to do the work. Your attorney explains that unilateral administrative orders issued under section 106 of CERCLA may be issued if a release or threat of a release of a hazardous substance from a facility may present an imminent and substantial endangerment to public health, welfare, or the environment. The order must include findings on the hazardous substances at the site, the nature of the release or threat of a release, the location of the release, the nature of, and basis for the finding of a possible imminent and substantial endangerment.

Your attorney explains that U.S. EPA uses unilateral administrative orders when viable private parties exist and are not willing to reach a timely settlement to undertake work under a consent order or decree. At that time, U.S. EPA has the authority to compel private-party response through unilateral administrative orders. If the responsible party does not comply with the order, U.S. EPA may refer the case for judicial action to compel performance and recover penalties. Your attorney explains that because of the presence of hazardous wastes in the soil and groundwater at your property, U.S. EPA should have little trouble showing an imminent and substantial endangerment to public health, welfare, or the environment at your facility.

Your attorney's review of the unilateral administrative orders issued by U.S. EPA against your company appear to be legally enforceable. Based upon what your attorney perceives as the validity and enforceability of the orders, your attorney explains that if your company, as a responsible party, does not comply with the unilateral orders, U.S. EPA can perform a cleanup using government money and then seek to recover those costs from your company through the courts. In addition, U.S. EPA can seek to recover punitive damages, and penalties.

You immediately ask your attorney what type of punitive damages and penalties your company might be responsible for if it refused to perform the clean up. Your attorney explains that under CERCLA §107(c)(3), U.S. EPA is authorized to collect punitive damages from one to three times the costs incurred by the government. This means that if the government spends one million dollars performing the clean up, you could be responsible for an additional punitive amount of three million dollars for not complying with the order to clean up the site. Furthermore, your attorney explains that under CERCLA section 106(b)(1), "any person who, without sufficient cause, willfully violates, or fails or refuses to comply" with any order, may be fined up to $25,000 for each day in which the violation occurs or the failure to comply continues. In other words, for every 30 day period that you refuse to comply with the unilateral order, U.S. EPA could recover an additional $750,000 in penalties.

You tell your lawyer that at least the government has to spend its money to cleanup the site before it can go after your company's money. By the time U.S. EPA finishes, you will have sold everything off and there will be no assets to pay fines and penalties. Your attorney explains that U.S. EPA has the option to request an enforcement order through the court pursuant to section 106, to compel compliance and to assess and to collect penalties so as to prevent you from stalling and liquidating company assets. In other words, if U.S. EPA goes to court to force you to comply with the order, and you refuse to comply with the order by stalling, you can be held in contempt of court. If you are held in contempt of court, the judge can throw you in jail if you do not comply with U.S. EPA's order when so ordered by the court. Regardless of the route U.S. EPA chooses to take upon noncompliance with a unilateral order, your attorney explains that your company will remain potentially liable for the response action, and in the worst possible scenario, you could go to jail for refusing to comply with the court's order to enforce the unilateral administrative order.

You tell your attorney that you would rather pay him to fight U.S. EPA's unilateral administrative order than to pay for what you consider a senseless cleanup. To your amazement, your attorney informs you that CERCLA precludes a responsible party from initiating court proceedings to challenge a unilateral order upon receipt. Under CERCLA section 113(h), courts may review section 106 orders only when U.S. EPA seeks to enforce the order, or if U.S. EPA seeks penalties for violation of the order, or if the responsible party attempts to recover money from U.S. EPA for response costs incurred after compliance with the order. Therefore, if responsible parties refuse to comply with a unilateral order, the Agency may use the government money in the "Superfund" to clean up the site, without first defending its actions in court. Furthermore, your attorney explains that once in a court proceeding where the validity of the order is properly at issue, section 113(j)(1) of CERCLA provides that judicial review of any issues concerning the adequacy of any response action is limited to the administrative record. U.S. EPA already will have compiled the administrative record for the selection of the remedy. Therefore, where U.S. EPA expects a court challenge to a clean up, it is U.S. EPA that prepares the evidence for the court to review. This record will include information on the release, the possible endangerment, and the response action required. The court will consider no other evidence outside of the administrative record.

You ask your attorney what, if anything, can be done, and your attorney explains that it is U.S. EPA's policy to provide responsible parties with an opportunity to discuss with the U.S.EPA regional office issuing the order, implementation of the response actions required by the order, and the extent to which the respondent intends to comply. However, your attorney cautions you that U.S. EPA will not participate in the conference for the purpose of resuming settlement negotiations or negotiating the terms of the order. Your opportunity to negotiate a settlement on terms better than those required by the order expired when your company refused to negotiate a timely consent decree. Furthermore, the conference is not an evidentiary hearing, and the opportunity to confer does not give your company any type of right for a court to perform a pre-enforcement review. In addition, the conference is not intended to be a forum for discussing liability issues or whether the order should have been issued. Instead, U.S. EPA views the conference as a way to ensure that the order is based on complete and accurate information, and to facilitate understanding of implementation. Essentially, your attorney explains, the conference is merely a mechanism for U.S. EPA to explain how you will comply with the order. In other words, the conference is where U.S. EPA tells you that settlement negotiations are over - now you will do it the way U.S. EPA's order dictates.

U.S. EPA's authority to issue unilateral orders has become one of its most powerful tools for forcing companies to undertake a clean up. Unilateral administrative orders are primarily used against responsible parties who delay, stall and otherwise thwart efforts by U.S. EPA to obtain a voluntary clean up. I advise clients who are involved in settlement negotiations with U.S. EPA to be aware that if the negotiations break down, U.S. EPA has the authority to issue a unilateral administrative order. Once a unilateral administrative order is issued, all negotiations are over and the U.S. EPA will get practically whatever it wants, at your expense.