The Nickel Report

As the country responds and adapts to unprecedented change as a result of the COVID-19 pandemic, companies are, understandably, attempting to sort out what these shifts mean for operations now and in the near future. One operational aspect that companies must address is management of environmental compliance programs and responsibilities. Although it can be challenging to maintain compliance with environmental requirements during periods of uncertain or disrupted operations, doing so remains necessary as environmental regulatory requirements remain in force, despite disruptions to government functions. The current operational and regulatory climate is fluid and changing daily (at least), making it incumbent upon companies to remain vigilant in monitoring for updates and understanding the status of rules and requirements at any given moment. The keys to successfully navigating compliance challenges during the pandemic are preparedness, situational awareness, and early and frequent communication with regulatory agencies as appropriate, with the assistance of counsel as needed.

The COVID-19 pandemic may result in disruptions to environmental compliance obligations due to shelter-in-place orders, employee sickness, supply chain failures and decreased environmental testing capacity at laboratories. Now is the time to take stock of environmental risks, evaluate environmental compliance requirements and anticipate potential issues stemming from changes to operations and your company’s workforce. Environmental requirements may be imposed by permits, consent decrees, regulatory orders or a combination thereof. In order to plan for short- and long-term impact to operations while still remaining in compliance, you need a clear understanding of what requirements need to be addressed and how to meet those.

With workers potentially unable to report to physical offices and industrial sites, companies need to identify what personnel are typically responsible for performing compliance tasks and assess alternatives to carry out environmental compliance duties under the current circumstances. Provided that they are not ill, some of these personnel may be considered essential employees, particularly in certain critical industries, able to continue reporting to work even under the strict stay-at-home orders in place in a growing number of states. Others, however, may be deemed nonessential or contract workers whose ability to continue performing such tasks is less clear. Still others may be consultants or other companies that you rely on for particular environmental services, but over which you have no ability to control their response to the COVID-19 pandemic. Even if the workers that perform particular compliance duties under normal conditions are available to continue doing so now, enacting a contingency plan for who will perform those functions should they fall ill or otherwise become unavailable is prudent under the circumstances.

Environmental compliance requirements take a variety of forms, including substantive conditions like demonstrating compliance with standards as well as administrative obligations, such as recordkeeping and reporting. In the face of constraints on available employees, companies may need to contemplate how to prioritize responsibilities to ensure the most critical tasks are completed. Companies facing these decisions should consult with counsel to decide how to allocate employees and prioritize among sampling and monitoring, recordkeeping and reporting requirements.

Communication is the other linchpin to navigating environmental compliance successfully. Regulatory agencies, like companies, are adapting to the rapidly evolving climate. This means that Agency personnel are likewise dealing with their own challenges, both within agency offices and at home. Agencies across federal, state, and local levels are handling the response to the pandemic differently. For example, at the federal level:

• The Office of Management and Budget instructed agencies on March 17, 2020, to adjust operations and services to minimize face-to-face interactions, while allowing for exceptions when continued operations and services are necessary to protect public health and safety. Each individual agency is to “execute this realignment of non-mission-critical activities, while also ensuring that their agencies continue to serve the American people and operate in the most efficient manner possible to deal aggressively and promptly with the current situation.”
• On March 20, 2020, the Pipeline and Hazardous Materials Safety Administration (PHMSA) Office of Pipeline Safety issued a Noticeto gas and hazardous liquid pipeline, underground natural gas storage and liquefied natural gas (LNG) facility operators, as well as PHMSA state partners, explaining that it will stay enforcement of certain PHMSA pipeline safety requirements in light of the President’s March 13, 2020, Declaration of National Emergency relating to COVID-19.
• On March 26, 2020, the US Environmental Protection Agency issued a memo providing guidance to regulated industry regarding COVID-19 Implications for EPA’s Enforcement and Compliance Assurance Program.

State agencies have responded with a variety approaches. For example, the Texas Commission on Environmental Quality and the state Railroad Commission, which oversees oil and gas, have announced they're prepared to waive certain requirements for companies "on a case by case basis." Pennsylvania’s Public Utility Commission issued an emergency order allowing permitting and other procedural deadlines to be changed. We have detailed the quickly developing environmental regulatory landscape in California, one of the first states subject to a far-reaching stay-at-home directive, in a separate post.

Even if agencies may favorably exercise their enforcement discretion in response to the pandemic, regulated industry still faces risk from private parties pursuing citizen suit claims under various federal and state laws.

To mitigate risk associated with environmental compliance and enforcement issues during the COVID-19 pandemic, the key to protecting your company’s interests often lies in proactive communication with your regulators. Compliance requirements, rather spelled out in regulations or permits, may specify mechanisms for notifying regulatory agencies of compliance difficulties. Depending on circumstance, this communication may be verbal or written, and may cover a range of compliance issues. For instance, is your company continuing to run environmental compliance programs at its facilities on schedule or are they delayed? What relief, if any, is available in the event that your company is unable to meet its compliance obligations due to circumstances caused by the pandemic? Is your company aligned with regulatory agencies on the path forward for compliance obligations under these extraordinary circumstances?

Companies should consult with counsel, before a compliance problem arises, to anticipate issues and identify an efficient and effective path forward to minimize enforcement risk and ensure continuity of operations. Counsel can also evaluate whether potential defenses, like force majeure clauses or claims of “impossibility” under state law or common law doctrines, may be available should the need exist. Companies should be aware, however, that force majeure or act of God defenses are unlikely to be available for circumstances that can be reasonably anticipated and for which there is time to plan a reasonable response. At this point, companies have notice of the COVID-19 pandemic and it is therefore prudent to put systems into place to address reasonably anticipatable disruptions to compliance programs. As with most issues, any approach will need to be tailored to your individual circumstances, meaning that companies should contact counsel now to start assessing your situation.

Despite disruptions and resulting impacts to operations during the COVID-19 pandemic, environmental regulatory requirements remain in place. Examples of environmental enforcement resulting with noncompliance arising during prior crises offer cautionary guidance to companies. For instance, following Hurricane Harvey in 2017, explosions and fires at a chemical plant in hard-hit Houston appeared to have occurred due to unexpected flooding of a magnitude not seen in the recent past. Nonetheless, a criminal indictment was pursued as a result of the incident.

Continued compliance with environmental regulatory obligations remains critical. Moreover, many environmental enforcement tasks can and will continue as the regulators work from home. To mitigate the risk of environmental enforcement arising from disruptions due to the pandemic, companies should keep a watchful eye on the ever-changing conditions and adapt accordingly. Maintaining an open-line of communication with regulators can ensure that companies are operating consistent with expectations under the circumstances and can reduce the risk of enforcement. As always, consulting with outside counsel can assist in communications with regulators and developing contingency plans to mitigate risk of non-compliance or reduce exposure to potential enforcement in the event of disruption.