Failure to submit required environmental reports can be financially consequential, not to mention the potential public relations challenges associated with an environmental violation.  These violations can occur at small/medium-sized companies with no or limited environmental staff and large companies with more robust support.

Historically, the United States Environmental Protection Agency (USEPA) “enforced” environmental compliance with fines and penalties.  Six- and seven-figure fines were not uncommon.

But the trend for enforcement over the past several years has changed dramatically.   

Long-Term Downward Trend in Environmental Inspections

Observed federal trends relating to environmental enforcement date back several years. According to data from the USEPA, there has been a steady decline in Federal inspections (conducted by EPA) since 2012. For example, in 2012, there were 20,077 inspections, and in 2018, that number was nearly cut in half to 10,612 inspections.

Long-term trend continues to show a decline in enforcement case initiations and conclusions (Source and Credit USEPA).

Likewise, civil enforcement has shown a steady decline dating back to 2008.  In fiscal year (FY) 2008 total “civil enforcement initiatives and conclusions” were around 3,700. In FY 2018, this number was cut in half to 1,800.

Self-Disclosure Increases

Voluntary disclosures, on the other hand, have increased markedly.  In FY 2015, there were 289 (at 666 facilities) voluntary disclosures.  In 2018, that number had risen to 532 (at 1,561 facilities).  The EPA states, “In the nearly three years since launching eDisclosure, EPA has seen about a 74% increase in the number of annual self‐disclosures as compared to the two years prior to its launch.”

See our October Environmental Compliance Tip for more information on self disclosure. Also, see The EPA’s Policy Statement on Civil Enforcement and Compliance.

 

Stakeholder Pressure

For many companies, the driver for compliance, sustainability, and corporate stewardship is not regulatory but rather part of their mission statement and part of their corporate messaging.  Some mutual funds only invest in companies with a strong commitment to sustainability (e.g., Brown Advisory Sustainable Growth Fund).  Will social pressure, monetary pressure, or stakeholder pressure drive environmental compliance for companies in the future?  Further, will we continue to see a move away from federal “command-and-control” in favor of states and market pressures?

Voluntary disclosure show dramatic increase (Source and Credit USEPA).

Environmental Regulators Can and Will Enforce

With the above said, regulators have not abandoned the notion of environmental enforcement.  Case in point was the recent settlement with Rust-Oleum in Maryland. According to one report, “Inspectors from the EPA (Environmental Protection Agency) and the MDE (Maryland Department of the Environment) identified numerous monitoring, record-keeping and hazardous-waste storage violations during an inspection.”  Though it appears there was no release, the result was a $168,000 fine.

Making Environmental Compliance a Priority

If the “aim” is environmental compliance, then the increase in self disclosure is certainly good news.  If I were to venture a guess at the demographics (and this is only a guess), I would bet that those taking advantage the of self-disclosure policy are more seasoned, savvy environmental professionals who understand the benefits of this program…and may have a few battle scars from previous enforcement efforts.

We encourage our clients to make periodic environmental compliance assessments a priority for several reasons:  state and federal regulations change, threshold reporting requirements change, production and chemical use changes, etc.  In other words, environmental compliance is a moving target.

A Word of Caution

While federal enforcement is certainly trending downward, we caution against complacency, and we also suggest you pay particular attention to state inspection/enforcement trends.

Over the years, we have helped our clients assess, and in many cases discover, potentially-significant, missed reporting/planning issues.  In a majority of these instances, our client was able to self disclose (with legal counsel) and avoid what could have been six- or seven-figure fines.

If you have questions or would like to schedule an environmental compliance assessment for your facility, contact your Dragun Project Manager or contact me at 248-932-0228, Ext. 134.