The Cleanup Checklist: Meeting Your Spill Reporting Obligations

Almost every industrial facility has a hazardous material somewhere on site. Small spills or emissions of that material can trigger immediate reporting obligations. In-house counsel of companies that do business in multiple states face the dual challenge of understanding not only federal release reporting laws, but also state laws that could impose additional requirements. For emergency events, or even routine spills, the most valuable compliance tool is a practical checklist of key regulatory requirements that will help simplify reporting and simultaneously provide general legal guidance when accidents occur. This article provides that checklist, addresses five frequently asked questions and offers recommended responses, and compares US law to related laws and regulations in Canada.

I. Matrix of US federal requirements

Facilities operating within the United States are subject to the following set of federal reporting requirements, as well as additional state and local requirements. The requirements below stem from the Emergency Planning and Community Right-to-Know Act (EPCRA), the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), the federal Clean Water Act (CWA), the federal Spill Prevention Countermeasure and Control Plan (SPCC) program, the National Pollutant Discharge Elimination System (NPDES), the Underground Storage Tank (UST) law, the Toxic Substances Control Act (TSCA), and other similar laws. Not summarized are worker-safety laws that arise under the federal Occupational Safety and Health Act, requirements for Polychlorinated Biphenyls (PCBs), or requirements of the Accidental Release Prevention Program and Risk Management Plans.

II. First steps in compliance

The federal laws in Section I prompt several key issues that must be investigated for every incident in order to help determine the reporting path that is required.

• Determine what substance is involved. EPA’s List of Lists provides a quick resource that summarizes listed chemicals. It was last updated in 2015, so it is important to refer to the listed substances under each statute. Remember that CERCLA excludes petroleum (and all its constituents) from the definition of “hazardous substances.” EPCRA, however, does not exclude petroleum from the definition of “extremely hazardous substances.” Therefore, releases of petroleum and petroleum-contaminated media are reportable under EPCRA when they contain a reportable quantity or more of an EPCRA extremely hazardous substance, such as hydrogen sulfide. But, hazardous substances contained in petroleum do not trigger an EPCRA report. For this reason, the hazardous substances released during the BP Deepwater Horizon crude oil spill were not reportable under CERCLA, but EPCRA reporting required analysis.
• Determine if there was a release into the environment. In Fertilizer Institute v. US EPA, 935 F.2d 1303, 1310 (D.C. Cir. 1991), the DC Circuit stated, “nothing less than an actual release of a hazardous material into the environment triggers the reporting requirement [under CERCLA].” Nonetheless, release is defined broadly, and includes abandoned barrels. Also, discharges that reach storm drains have been considered discharges to navigable waters for permitting purposes. Thus, generally, a release is construed broadly but must involve actual impact on the environment. However, some laws, like the UST law or California’s hazardous material law, require reporting before a release occurs at the point when monitoring or other circumstances show the potential that a release is occurring or about to occur. Spotting and reporting potential releases prevent accidental releases from occurring.
• Determine if there was sufficient knowledge of a release. The “duty to immediately report a release under EPCRA, as well as CERCLA, arises as soon as the facility personnel have knowledge … or should know of such a release,” and not necessarily the exact quantity released. The EPA has taken the position that reports are due within 15 minutes.

Knowledge by a mid-level employee to his supervisor may be imputed; therefore, knowledge does not mean the point at which environmental personnel learned of information.

Knowledge depends on when there is “enough information that it could reasonably be said that [a facility] knew that the releases were at or above reportable quantities even though it did not know the exact quantities released.” Further, “EPCRA does not require reporting before a facility has some degree of certainty that a reportable release has occurred … ”

III. Penalties, liabilities, and other concerns

Penalties and liabilities for failures to report are significant, as are other concerns that companies face during spill incidents. The CWA provides a good example. The CWA civil penalties are up to US$25,000 per day or US$1,000 per barrel of oil discharged, or, where gross negligence or willful misconduct is involved, up to US$100,000 and not more than US$3,000 per barrel of oil. Other penalties could arise as well.

The CWA imposes criminal penalties of up to US$50,000 per day of violation or by imprisonment of not more than three years, or both, for knowing violations and up to US$1,000,000, or imprisonment for up to 15 years, or both, for violations involving knowing endangerment. Establishing criminal liability under the CWA does not require showing intent. The CWA is interpreted as a public welfare law under which a person may be subject to criminal liability for his or her ordinary negligence. Thus, the government does not need to prove that a facility knew that its acts violated legal standards. Precedent was established in a 1994 case when two managers of a sewage treatment plant operating under an NPDES permit were convicted of knowingly discharging pollutants into a navigable water and in a 1999 case when a railroad operator should have been aware of the possibility of strict regulation where high-pressure petroleum products pipelines were nearby and could be punctured.

In addition to the recovery of civil or criminal penalties, the owner or operator of a facility is also liable under the CWA for up to US$50,000,000 of the actual costs of removal associated with the spill. A spill to navigable waters can trigger liability under the federal Oil Pollution Act of 1990 (OPA), which imposes liability for removal costs upon owners or operators of onshore facilities that cause — or pose a threat of causing — a release to navigable waters.

Other federal schemes impose penalties and liabilities similar to the CWA; therefore, companies that handle regulated hazardous materials, hazardous substances, and extremely hazardous substances must train facility personnel to fully comply with each applicable standard.

IV. Voluntary reporting of incidents that are under a reportable threshold

In light of significant penalties, companies frequently are counseled to voluntarily report even if a release is under a reportable quantity or threshold. This serves to prevent allegations later that a company knew of actual or threatened releases and failed to disclose them. A good approach is to provide the following information when reporting:

• Purpose: We are calling to report a potential threatened release related to [specify incident, for example: an overflow into the sewer; a mistaken shipment of certain materials to a solid waste landfill; a spill of fuel on our concrete floor; etc.] We are reporting in the abundance of caution while we complete our evaluations related to incident. We do not believe a release has occurred or will occur, but because we are not sure, we are choosing to report.
• Potential hazards: We do not believe there are any potential hazards because the vast majority of the material involved was [specify reason, for example: non-hazardous, recovered, etc.] For reasons we do not fully understand yet, we detected the presence of a hazardous material in our initial evaluation.
• Location: [Give address where release occurred.]
• Name: [Provide corporate name.]
• Hazardous material involved: [Listed chemical name] in an amount well below federal reportable quantities.
• Amount: [Provide an estimate.]
• When discovered (if asked): We have not discovered any release. We discovered on or about [date] that a potential threatened release may exist based on ongoing internal evaluations. We decided it was better to report this potential threatened release now rather than after our internal evaluations are completed.

V. Five frequently asked questions and responses

In our experience, the federal framework for reporting spills has prompted the following five FAQs that practitioners should become equipped to handle. Each scenario below provides an example and recommended response; however, reporting requirements must be evaluated on a case-by-case basis.

1. Spills to sewer: A rise in subsurface groundwater causes a buried pipe to release contaminated groundwater into the storm drain. Sample results detect three parts per million (ppm) or 3,000 parts per billion (ppb) benzene from gasoline when measured at the drainage pipe. No more than 5.9 ppb benzene may be discharged to state waters under the state’s water quality control plan, but no data show whether that amount is exceeded at the receiving waters. Further, the property involved is subject to NPDES permitting requirements.

Response: Benzene from gasoline is not a reportable substance under CERCLA or EPCRA. CWA reporting requirements, however, are triggered. Normally, a discharge into a storm drain is a discharge into navigable waters if the storm drain flows to navigable waters. However, it is possible that CWA liability would only arise if the discharge reached waterways in a “quantity or concentration which could conceivably be deemed harmful.” But if the elevated benzene levels in the discharge at issue exceed the 0.5 ppm hazardous waste toxicity level for benzene under 40 C.F.R. § 261.24(a), it provides evidence of potential environmental harm and would weigh in favor of reporting the release voluntarily.

Also, because the facility holds an NPDES permit, it is subject to 40 C.F.R. § 122.41, which requires that an NPDES permit-holder report “any” non-compliance that “could endanger” health or the environment, including any upset exceeding effluent limitations or any violation of maximum discharge limitations. The flow into the storm drain is not compliant with NPDES permit standards that regulate every discharge into storm drains and would likely be viewed as a discharge that “could endanger” the environment. As a result, a report would be advisable.

In addition to reporting under the NPDES program and CWA, it would be advisable to disclose the elevated benzene levels within 21 days of discovery in order to prevent the issuance of a notice of violation for unlawful disposal of a hazardous waste. EPA has a self-disclosure policy to reduce gravity-based penalties and is currently renewing emphasis through EPA’s eDisclosure system.

2. Detections of subsurface contaminants: Test results show perchloroethylene (PCE, sometimes referred to as tetrachloroethylene) in groundwater beneath a company-operated facility that was used for industrial purposes by others in the past. In many cases, PCE originates from spills or leaks; however, facility operators interviewed are not aware of any evidence of leaks or spills at the site. Additionally, it appears that local groundwater in the vicinity of the site is impacted by PCE. The origin of the PCE at the site is not known.

Response: Normally, a discharge of a hazardous substance to “navigable waters” is reportable to NRC where it exceeds a reportable quantity (RQ). Here, PCE is a hazardous substance, but the amounts involved do not appear to exceed the 100-pound RQ. The amounts involved are concentrations of PCE, rather than mass quantities. Given the low concentrations, there would be no reason to believe 100 pounds or more of PCE have been discharged to the environment. Under CERCLA, a person in charge of a facility must report a release above an RQ of a hazardous substance as soon as such person has knowledge of the discharge. Here, an RQ or more of PCE is not involved, so a report would not be required.

In California, a report might be required — even if it is below the 100-pound RQ — under Health & Safety Code §§ 25507 or 25359.4 if there is evidence that PCE from the site is posing a significant threat to public health and safety or the environment.

3. Air emissions “subject to” federally enforceable limit: A refinery experiences a malfunction that increases the levels of hydrogen sulfide (H2S) in fuel gas subject to the New Source Performance Standards in 40 C.F.R. Part 60, Subpart J. This increases emissions of sulfur dioxide (SO2) from the refinery equipment burning the fuel gas when other operating parameters could not be adjusted. The emitted chemical — SO2 — is listed under EPCRA.

Response: EPCRA, 40 C.F.R. § 355.31, excludes federally permitted releases from reporting obligations. Here, the malfunction standards in the applicable federal regulation, 40 C.F.R. Part 60, Subpart J, permitted equipment to vent to the atmosphere during a malfunction, but although these emissions are permitted federally, they are not “federally permitted” for purposes of EPCRA. In practice, EPA interprets federally permitted to mean “in compliance with” a specific standard, rather than being exempt from a standard due to an emergency or other condition. As a result, the release would not be considered federally permitted for purposes of EPCRA and a report is required. However, the facility should evaluate whether its emissions remained in compliance with any federally enforceable local rule. For example, no EPCRA report would be required if the amount emitted remained in compliance with the annual allotment of SO2 emissions for the facility under a federally enforceable local regulation.

4. Shipments of potentially hazardous waste to a solid waste landfill: Two 10-yard bins of construction debris were mistakenly sent to a solid waste landfill for disposal. A composite sample of the materials in the bins was later found to exceed 1,2-Dichloroethane (1,2 DCA) levels under 40 C.F.R. § 261.24. These levels render the material a hazardous waste when disposed of, and CERCLA assigns a 100-pound RQ. EPA estimates that a cubic yard of construction and demolition debris weighs between 773 to 999 pounds (see EPA Weight Conversion Factors, 2016); so, the 100-pound RQ is exceeded.

Response: Regulators would likely argue that the disposal of hazardous waste at a solid waste landfill, by definition, is a release that poses a potential for harm because solid waste landfills are not equipped with the same level of safeguards as those that may accept hazardous waste. On the other hand, the company’s environmental health and safety professionals may believe, based on experience and knowledge, that the 1,2 DCA will not be released into the environment. In light of the conflicting views on whether the disposal of the bins constitutes a release at the landfill, the more conservative approach is to report the incident under CERCLA and EPCRA.

Another issue to address in this scenario is the potential hazardous waste violations for disposing of the bins with potentially hazardous waste at a solid waste landfill. Federal law requires that generators of waste characterize their waste prior to disposal, transport hazardous waste with a manifest, and dispose of hazardous waste at authorized facilities.

5. Contractors who cause spills: A contractor working at a client’s facility overfills fuel in a backup generator, causing a release of dozens of gallons. The spill is contained within the facility’s concrete basin and has not entered soil or a storm drain.

Response: While arguments exist that a company is not vicariously liable for the negligence of a contractor, there are exceptions. A regulator is likely to take the position that a company has a non-delegable duty to ensure its contractor does not spill fuel in a way that poses risk. Thus, where a contractor causes a spill, a report by the facility would be advisable in most situations. Here, however, the release has not reached a waterway, therefore, a report is not required.

VI. State law — California example

The laws within each state impose additional reporting obligations. California law, for example, includes reporting of not only releases but also threatened releases. Reports under most laws are to the Office of Emergency Services (OES), which is part of the California Emergency Management Agency (Cal-EMA), the local administering agency, which is the Certified Unified Program Agency (CUPA), or both.

VII. Comparing Canada’s reporting requirements

The United States appears to be unique in itemizing various levels of reporting to different agencies under different programs. A similar structure exists in Canada, but release reporting tends to focus on reporting accidental releases, pipeline and marine incidents, workplace safety incidents, and incidents during the transport of dangerous goods (TDG). The Environmental Emergency Regulations under the Canadian Environmental Protection Act, like EPCRA, contains a list of substances that trigger reporting if they enter the environment as a result of an environmental emergency. Unlike CERCLA, the Canadian law lists gasoline in its list of substances. The Canadian list of substances does not explicitly list a reportable quantity, like CERCLA and EPCRA, but Canada’s TDG law provides reporting quantities that vary based on the type of incident involved.

Awareness of these spill reporting guidelines and common scenarios will help in-house counsel protect their companies from violations for failures to report. Additionally, early detection and reporting of spill incidents enhance a company’s ability to assess necessary follow-up steps that provide appropriate response and remedial actions.