Manufacturers, suppliers, retailers, and other entities in supply chains for consumer products sold in California might soon need to provide warnings regarding certain per- and polyfluoroalkyl substances (PFAS) in their products. California’s Office of Environmental Health Hazard Assessment (OEHHA) recently announced its intent to further regulate and study certain per- and polyfluoroalkyl substances under California’s Safe Drinking Water and Toxic Enforcement Act of 1986, commonly known as Proposition 65. Proposition 65 prohibits companies from knowingly exposing California consumers to chemicals “known to cause cancer or reproductive toxicity” (i.e., “listed chemicals”) in consumer products without first providing a “clear and reasonable warning.” (Although not the focus of this article, Proposition 65 also addresses occupational and environmental exposure to listed chemicals.)
Environmental Compliance & Enforcement Defense
On December 16, 2020, a cold storage warehouse and ice manufacturing facility in East Providence, Rhode Island, entered into a guilty plea with the Justice Department for a “knowing” criminal violation of Clean Air Act section 112(r)(7), 42 USC 7412(r)(7), in connection with EPA’s Chemical Accident Prevention Program and requirement to submit a risk management plan (RMP) under 40 CFR Part 68. The facility used a refrigeration system to manufacture and store ice and other frozen products, with 19,000 pounds of anhydrous ammonia in the refrigeration process.
Manufacturing facilities, industrial operations, and other businesses subject to environmental statutes and regulations will want to evaluate a new EPA document when considering whether and how to voluntarily disclose environmental violations to the federal government. EPA recently published a 22-page guidance document, dated January 2021, clarifying EPA’s Audit Policy. EPA’s Audit Policy consists of incentives the agency offers to companies that voluntarily discover their own violations of environmental laws and regulations and disclose the violations to EPA. When all of the nine eligibility conditions in the Audit Policy are met, the Audit Policy allows for up to complete elimination of the gravity-based portion of civil penalties for environmental non-compliance, and a recommendation of no criminal prosecution. (EPA penalties may also include amounts to address the economic benefit of non-compliance, which the Audit Policy does not address.) The Audit Policy itself is memorialized in Incentives for Self-Policing: Discovery, Disclosure, Correction and Prevention of Violations, 65 Fed. Reg. 19618 (Apr. 11, 2000) (an update to the original 1995 document establishing the Audit Policy).
Chemical plant owners and operators need to carefully review a recent federal appellate court decision that could substantially expand process safety management (PSM) considerations and related chemical safety and accidental release regulatory requirements under EPA’s Risk Management Plan (RMP) program.
On August 26, 2020, the U.S. Securities and Exchange Commission (SEC) announced significant changes to the disclosure requirements for publicly traded companies under Regulation S-K. Businesses that receive monetary sanctions from the EPA and other governmental authorities involving violations of environmental laws will want to carefully review the new Item 103 Legal Proceedings rules as it may substantially alter disclosure obligations.
Accidental chemical releases in the workplace and offsite into the environment continue to be a high-priority enforcement area for both the U.S. Environmental Protection Agency and the U.S. Department of Labor’s OSHA, including releases of anhydrous ammonia and other toxic and flammable substances under the agencies’ RMP and PSM programs.
On April 21, 2020, the U.S. Army Corps of Engineers (“Corps”) and the Environmental Protection Agency published the finalized Navigable Waters Protection Rule in the Federal Register, ushering in significant changes to the definition of Waters of the United States (“WOTUS”), those waters federally regulated under the Clean Water Act. The rule affects multiple Clean Water Act programs, including Section 404 (wetlands), Section 402 (end-of-the-pipe discharges), and Section 311 (oil and hazardous substance spills). The rule is available here, and an EPA fact sheet regarding the rule is available here. For more background information, our latest article regarding the WOTUS saga is available here.
Companies nationwide that sell foods containing the chemical acrylamide to California consumers may find their regulatory burden lightened in the future. On October 7, 2019, the California Chamber of Commerce (CalChamber) filed suit against the California Attorney General in the Eastern District of California to prevent the state from enforcing Proposition 65 warning requirements for foods containing acrylamide. CalChamber’s Complaint asks the court to declare that the Proposition 65 requirement of carcinogen warnings for foods containing acrylamide constitutes false and misleading compelled speech in violation of the First Amendment, arguing that acrylamide in food has not been shown to be a human carcinogen. The Complaint also seeks an order prohibiting the State of California and private citizen enforcers from enforcing Proposition 65 warning requirements for foods containing acrylamide.
All companies in supply chains for products sold in California need to be aware of the law known as California’s Proposition 65. This is especially true because significant changes to Proposition 65 requirements go into effect on August 30, 2018, increasing potential liability.
Recently, EPA issued an Interim OECA Guidance on EPA and state roles on managing enforcement and compliance assistance. See, Interim OECA Guidance on Enhancing Regional—State Planning and Communication on Compliance Assurance Work in Authorized States. While EPA is seeking to emphasize cooperative federalism in modifying the emphasis of the 1986 revised policy on state/EPA enforcement agreements, as provided in the first footnote of the Guidance, the policy issued on January 22, 2018, appears to make the states the primary enforcer of environmental laws and provides a secondary role for EPA in that regard.