Earlier this year, the U.S. Environmental Protection Agency ("EPA" or "the Agency") reached a $1.375 million settlement with New Cingular Wireless, resolving the company's self-disclosed violations of the Emergency Planning and Community Right-to-Know Act ("EPCRA"). This settlement marks the continuation of EPA's rigorous facility compliance enforcement initiative targeting companies in the telecommunications industry. Dating back to 1998, EPA has pursued enforcement and "compliance assistance" efforts aimed at improving environmental compliance within the telecommunications industry. In the last 15 years, EPA has settled dozens of cases with telecommunications companies, typically involving compliance with various requirements under the Emergency Planning and Community Right-to-Know Act, the Clean Air Act, the Clean Water Act, and the Resource Conservation and Recovery Act.
Despite many years of EPA enforcement, telecommunications companies often are unaware of their environmental regulatory compliance risks, which sometimes are dismissed as a concern of traditional manufacturing industries. However, as the New Cingular Wireless settlement demonstrates, the regulations apply equally, and the penalties for non-compliance can be high. Some of the primary environmental regulations that impact the telecommunication industry are:
- Emergency Planning and Community Right-to-Know Act ("EPCRA"): Requires companies to notify state and local planning and emergency response authorities, and local fire departments, of the presence of certain chemicals at their facilities. These requirements can be triggered by telecommunications operations involving sulfuric acid and lead-acid batteries, as well as diesel, lead, halon, and propane. Material safety data sheets ("MSDS") must be submitted, and annual chemical inventory reports must be filed.
- Clean Air Act ("CAA"): Under the CAA, states may require a permit before construction of any source of pollution. Generators at telecommunications facilities may fall under such a requirement, depending on the size of the generator and the particulars of the state program. In addition, the CAA regulates the use of various refrigerants that may be used in air conditioning units used to cool telecommunications equipment.
- Clean Water Act ("CWA"): The CWA requires companies that store oil or petroleum to prepare and keep updated written Spill Prevention, Control, and Countermeasure ("SPCC") plans. Telecommunications facilities with oil storage tanks for use in back-up generators or for vehicle fueling may require an SPCC plan.
- Resource Conservation and Recovery Act ("RCRA"): RCRA requires generators of hazardous waste to identify and manage the waste properly. Telecommunications operations may involve the handling of waste batteries and fluorescent lamps, which are subject to "universal waste" storage and labeling requirements, and may generate other wastes that qualify as hazardous under EPA regulations.
EPA has settled a number of noncompliance issues at telecommunications facilities under the agency's Audit Policy, which provides incentives, in the form of reduced penalties (often substantially), for companies that voluntarily disclose and correct violations. To qualify for penalty mitigation, the violations must have been discovered as part of a systematic audit or other assessment of environmental compliance, as well as meet several other criteria. If the Audit Policy criteria are met, then EPA will waive most, and often all, of the "gravity-based" portion of any potential penalty, and only assess against the disclosing company a penalty that reflects the "economic benefit" received by the company for failing to comply in a timely manner. For example, with respect to EPCRA reporting violations, the "economic benefit" is viewed as the time-value of the money that would have been spent if the reports were filed appropriately, including personnel costs and filing fees. Typically, this amounts to only a few hundred dollars per violation. In contrast, the full potential penalty for a failure to file an EPCRA inventory report at one facility is approximately $37,500 per missed annual report (EPA will go back five years). In short, companies could face substantial penalties if faced with an enforcement action by federal or state authorities. Disclosure under the Audit Policy is an option for mitigating any such penalties and coming into compliance in a responsible manner.
Due to resource constraints and the success of the Audit Policy program in reducing penalties, EPA recently is scrutinizing Audit Policy disclosures more strictly and rejecting those that are not done well. The Environmental team at Kelley Drye & Warren, LLP, has deep experience in auditing facilities for compliance with EPA programs and successfully navigating the requirements of the Audit Policy. We recently settled a case involving an Audit Policy disclosure by a telecommunications company of violations, with potential penalties of almost $1.2 million, for a total penalty of less than $20,000. Please let us know if you would like to discuss options for ensuring your company is in full compliance with EPA requirements.