In the Spotlight: Emergency Planning Obligations

This failure to recognize the presence of hazardous materials being stored on-site was precisely the mistake made recently by New Cingular Wireless PCS, LLC (the corporate successor of AT&T Wireless and Cingular Wireless). Earlier this year, New Cingular agreed to pay a penalty of $125,728 to the United States Environmental Protection Agency (EPA) after it disclosed the results of an internal audit that uncovered EPCRA violations at 642 cellular facilities in 35 states and Puerto Rico in connection with the presence of sulfuric acid, diesel and lead at those sites. By self-reporting those violations through the EPA's audit policy, the company managed to avoid a potential $6.7 million penalty. According to EPA, in addition to paying the penalty, the company corrected the violations and made improvements to its battery inventory, record-keeping and management systems to prevent similar violations in the future.

About the EPCRA

In December 1984, a cloud of methyl isocyanate was accidentally released from a Union Carbide plant in Bhopal, India, killing thousands of people. Following that disaster, the EPCRA was enacted in the United States with the dual purpose of: 1) increasing public information regarding chemicals used or stored at facilities; and 2) protecting public health and the environment in the event of a hazardous chemical release. The EPCRA requires owners and operators of facilities that store specified amounts of designated chemicals to provide information about those substances to local, state and federal authorities. As a result of providing that information, in the event of a fire or other emergency situation, the responding agency (e.g., the fire department) will be armed with the information it needs to able to address the specific threats at the location.

The EPCRA applies to facilities that have more than a certain quantity of extremely hazardous substances (EHSs) or non-EHS hazardous chemicals stored on-site. With respect to EHSs, EPCRA reporting requirements apply to facilities that store an aggregate of 500 pounds or more of an EHS or an amount that is greater than or equal to the Threshold Planning Quantity (TPQ) for the EHS, whichever is lower. The EPA publishes the “List of Lists,” which catalogs all EHSs and their respective TPQs. Non-EHS hazardous chemicals include all substances for which a facility must maintain a material safety data sheet (MSDS) under the Occupational Safety and Health Act (OSHA) Hazard Communication Standard, including any chemical which is considered to be a physical hazard (e.g., flammable) or health hazard (e.g., causes irritation, lung damage, or cancer). For non-EHS hazardous chemicals, the reporting requirements will be triggered if a facility stores more than 10,000 pounds of a given substance at a given time.

• Under Sections 302 and 311 of the EPCRA, if a facility maintains a quantity of an EHS (such as sulfuric acid) or a non-EHS hazardous chemical (such as diesel fuel) that exceeds the applicable threshold, the owner or operator of the facility is required to submit MSDSs for those substances to the State Emergency Response Commission (SERC), Local Emergency Planning Committee (LEPC), and the fire department with jurisdiction over the facility.
• In addition, Section 312 of the EPCRA requires the owner or operator of a facility that is also subject to Section 311 to submit chemical inventory forms to the same authorities on an annual basis. The information that is required to be reported may vary by state, but includes an estimate of the amount of each chemical stored at the facility and the general location where the chemical is being stored. In addition, if a facility makes any changes that are relevant to emergency planning ( e.g., the substances are moved to a different location in the facility), the owner or operator of the facility must notify the LEPC within 30 days of the change.
• If there is a spill or other release of a hazardous or extremely hazardous substance that exceeds the “reportable quantity” (which varies, depending upon the specific substance at issue), the owner or operator of the facility must, under Section 304 of the EPCRA, immediately notify: 1) the SERC; 2) LEPCs for any area likely to be affected by the release; and 3) the National Response Center. Facilities must provide a written follow-up notification as soon as possible after the release.

Going back to the lead-acid battery example, if the amount of sulfuric acid (an EHS) from all batteries and other sources on the premises exceeds 500 pounds, then the sulfuric acid must be reported as an EHS. However, even if there is less than 500 pounds of sulfuric acid on-site, if the total weight of the lead acid batteries (which are, themselves, considered to be “hazardous chemicals”) on-site is 10,000 pounds or more, the reporting obligation for non-EHS hazardous chemicals will be triggered. Alternatively, the reporting threshold may be met if the total weight of each of the individual hazardous chemicals in the lead acid batteries plus the amount of those chemicals present throughout the facility is 10,000 pounds or more.

Applicability of Reporting Requirements to Landlords and Tenants

If EPCRA notification requirements are triggered at a leased commercial space, the question arises as to whether it is the landlord or the tenant that is responsible for compliance with the EPCRA's reporting obligations. EPCRA's statutory language assigns that responsibility to “the owner or operator of any facility which is required to prepare or have available a [MSDS] for a hazardous chemical under [OSHA].” OSHA's MSDS requirement, in turn, applies to employers, which are required to make MSDSs available to employees for each hazardous chemical used at the facility.

Chemical manufacturers, importers and distributors of hazardous chemicals must, under OHSA, provide labels on every container of hazardous chemicals shipped to an employer as well as an MSDS at the time of the first shipment of the chemical to an employer; employers are entitled to rely on information received from their suppliers as to whether or not a specific substance constitutes a hazardous chemical. “Facility” is defined under the EPCRA to include “all buildings, equipment, structures, and other stationary items which are located on a single site or on contiguous or adjacent sites and which are owned or operated by the same person (or by any person which controls, is controlled by, or under common control with, such person).” In addition, EPA guidance notes that while a building is under construction, the employer of the construction workers is considered to be the operator of the “facility” during that period and is responsible for compliance with EPCRA reporting obligations with respect to hazardous chemicals used in connection with the construction activities.

In practice, if the hazardous chemicals stored on-site are being used in connection with the tenant's business operations, then the reporting obligations would typically fall upon the tenant. On the other hand, if the hazardous chemicals are being used in connection with the building's mechanical systems, the identity of the party responsible for fulfilling the applicable reporting obligations may be less clear. In fact, there may be cases where the law views both the landlord and the tenant as having responsibility for compliance with reporting requirements.

A failure to comply with EPCRA reporting requirements could result in civil and administrative penalties of $10,000 to $75,000 per violation or per day for each violation. In addition, a knowing and willful failure to provide an emergency release notice as required under Section 304 could result in a criminal fine of up to $50,000 or up to five years in prison.

In addition to statutory penalties, a failure to comply with EPCRA reporting obligations could also contribute to more far-reaching physical and financial harm. If a landlord or tenant fails to notify emergency response agencies that hazardous chemicals are stored on-site, the fire department may not take necessary precautions in the event of an emergency. In those cases, the fire could result in bodily injury or extensive property damage that could have been avoided. Moreover, the building owner and the tenant may both find themselves the subject of personal injury or other lawsuits alleging that a responsible party's failure to properly notify emergency responders about the presence of hazardous chemicals at the facility constitutes negligence.

Because of the importance of clarifying the parties' respective responsibilities, the notion of drafting lease language to assign this responsibility to one party or the other is attractive. It is important to bear in mind also that the EPA has taken the position that private parties cannot, by contract, exempt themselves from direct liability under the EPCRA. It is, therefore, essential for parties that wish to fully insulate themselves from exposure to liability relating to the failure to comply with emergency planning obligations to seek strong indemnifications from the other party that include attorneys' fees. The indemnification language should, at a minimum, cover statutory penalties as well as physical harms that are exacerbated by a failure to report the presence of hazardous chemicals stored on-site properly. It would also be advisable to insist that the indemnifying party obtain general liability insurance or provide a bond or letter-of-credit in order to secure those obligations specifically. Finally, parties should consider including a provision in the lease that allows for the inspection of both the facility and the responsible party's records for purposes of determining compliance with applicable recordkeeping and reporting obligations. In the case of large-scale leasing arrangements, property managers may wish to retain a third-party consultant to conduct regular audits of the facility in order to ensure compliance with all applicable requirements.

Conclusion

Landlords and tenants may find it beneficial to evaluate their facilities to determine whether they are subject to reporting obligations. If, in fact, the owner or operator of a facility discovers that it has been remiss in fulfilling those obligations, it would be wise to seek assistance of legal counsel to determine whether it would be advantageous to utilize the EPA's audit policy to self-report this non-compliance.

Kathryn M. Long practices in Schiff Hardin's Lake Forest, IL, office, where she concentrates her practice in environmental law matters. She may be reached at [email protected] or 847-295-4324.

Owners and tenants of commercial buildings sometimes fail to recognize that certain chemicals stored on-site, most notably substances used in a building's mechanical system, could trigger annual reporting obligations. For example, if a building relies upon lead-acid batteries as part of a backup power system or a battery charging station, those batteries contain sulfuric acid, lead, lead oxide and lead sulfate.

Similarly, diesel fuel (considered to be a hazardous chemical) may be used to power backup generators at the building and could be stored on-site in an above ground or underground storage tank. Keeping those materials on-site may require notification to local emergency responding agencies, as required by the federal Emergency Planning and Community Right-to-Know Act (EPCRA) as well as state and local laws. Violations of those laws, particularly EPCRA, can carry significant penalties.

A Case in Point

This failure to recognize the presence of hazardous materials being stored on-site was precisely the mistake made recently by New Cingular Wireless PCS, LLC (the corporate successor of AT&T Wireless and Cingular Wireless). Earlier this year, New Cingular agreed to pay a penalty of $125,728 to the United States Environmental Protection Agency (EPA) after it disclosed the results of an internal audit that uncovered EPCRA violations at 642 cellular facilities in 35 states and Puerto Rico in connection with the presence of sulfuric acid, diesel and lead at those sites. By self-reporting those violations through the EPA's audit policy, the company managed to avoid a potential $6.7 million penalty. According to EPA, in addition to paying the penalty, the company corrected the violations and made improvements to its battery inventory, record-keeping and management systems to prevent similar violations in the future.

About the EPCRA

In December 1984, a cloud of methyl isocyanate was accidentally released from a Union Carbide plant in Bhopal, India, killing thousands of people. Following that disaster, the EPCRA was enacted in the United States with the dual purpose of: 1) increasing public information regarding chemicals used or stored at facilities; and 2) protecting public health and the environment in the event of a hazardous chemical release. The EPCRA requires owners and operators of facilities that store specified amounts of designated chemicals to provide information about those substances to local, state and federal authorities. As a result of providing that information, in the event of a fire or other emergency situation, the responding agency (e.g., the fire department) will be armed with the information it needs to able to address the specific threats at the location.

The EPCRA applies to facilities that have more than a certain quantity of extremely hazardous substances (EHSs) or non-EHS hazardous chemicals stored on-site. With respect to EHSs, EPCRA reporting requirements apply to facilities that store an aggregate of 500 pounds or more of an EHS or an amount that is greater than or equal to the Threshold Planning Quantity (TPQ) for the EHS, whichever is lower. The EPA publishes the “List of Lists,” which catalogs all EHSs and their respective TPQs. Non-EHS hazardous chemicals include all substances for which a facility must maintain a material safety data sheet (MSDS) under the Occupational Safety and Health Act (OSHA) Hazard Communication Standard, including any chemical which is considered to be a physical hazard (e.g., flammable) or health hazard (e.g., causes irritation, lung damage, or cancer). For non-EHS hazardous chemicals, the reporting requirements will be triggered if a facility stores more than 10,000 pounds of a given substance at a given time.

• Under Sections 302 and 311 of the EPCRA, if a facility maintains a quantity of an EHS (such as sulfuric acid) or a non-EHS hazardous chemical (such as diesel fuel) that exceeds the applicable threshold, the owner or operator of the facility is required to submit MSDSs for those substances to the State Emergency Response Commission (SERC), Local Emergency Planning Committee (LEPC), and the fire department with jurisdiction over the facility.
• In addition, Section 312 of the EPCRA requires the owner or operator of a facility that is also subject to Section 311 to submit chemical inventory forms to the same authorities on an annual basis. The information that is required to be reported may vary by state, but includes an estimate of the amount of each chemical stored at the facility and the general location where the chemical is being stored. In addition, if a facility makes any changes that are relevant to emergency planning ( e.g., the substances are moved to a different location in the facility), the owner or operator of the facility must notify the LEPC within 30 days of the change.
• If there is a spill or other release of a hazardous or extremely hazardous substance that exceeds the “reportable quantity” (which varies, depending upon the specific substance at issue), the owner or operator of the facility must, under Section 304 of the EPCRA, immediately notify: 1) the SERC; 2) LEPCs for any area likely to be affected by the release; and 3) the National Response Center. Facilities must provide a written follow-up notification as soon as possible after the release.

Going back to the lead-acid battery example, if the amount of sulfuric acid (an EHS) from all batteries and other sources on the premises exceeds 500 pounds, then the sulfuric acid must be reported as an EHS. However, even if there is less than 500 pounds of sulfuric acid on-site, if the total weight of the lead acid batteries (which are, themselves, considered to be “hazardous chemicals”) on-site is 10,000 pounds or more, the reporting obligation for non-EHS hazardous chemicals will be triggered. Alternatively, the reporting threshold may be met if the total weight of each of the individual hazardous chemicals in the lead acid batteries plus the amount of those chemicals present throughout the facility is 10,000 pounds or more.

Applicability of Reporting Requirements to Landlords and Tenants

If EPCRA notification requirements are triggered at a leased commercial space, the question arises as to whether it is the landlord or the tenant that is responsible for compliance with the EPCRA's reporting obligations. EPCRA's statutory language assigns that responsibility to “the owner or operator of any facility which is required to prepare or have available a [MSDS] for a hazardous chemical under [OSHA].” OSHA's MSDS requirement, in turn, applies to employers, which are required to make MSDSs available to employees for each hazardous chemical used at the facility.

Chemical manufacturers, importers and distributors of hazardous chemicals must, under OHSA, provide labels on every container of hazardous chemicals shipped to an employer as well as an MSDS at the time of the first shipment of the chemical to an employer; employers are entitled to rely on information received from their suppliers as to whether or not a specific substance constitutes a hazardous chemical. “Facility” is defined under the EPCRA to include “all buildings, equipment, structures, and other stationary items which are located on a single site or on contiguous or adjacent sites and which are owned or operated by the same person (or by any person which controls, is controlled by, or under common control with, such person).” In addition, EPA guidance notes that while a building is under construction, the employer of the construction workers is considered to be the operator of the “facility” during that period and is responsible for compliance with EPCRA reporting obligations with respect to hazardous chemicals used in connection with the construction activities.

In practice, if the hazardous chemicals stored on-site are being used in connection with the tenant's business operations, then the reporting obligations would typically fall upon the tenant. On the other hand, if the hazardous chemicals are being used in connection with the building's mechanical systems, the identity of the party responsible for fulfilling the applicable reporting obligations may be less clear. In fact, there may be cases where the law views both the landlord and the tenant as having responsibility for compliance with reporting requirements.

A failure to comply with EPCRA reporting requirements could result in civil and administrative penalties of $10,000 to $75,000 per violation or per day for each violation. In addition, a knowing and willful failure to provide an emergency release notice as required under Section 304 could result in a criminal fine of up to $50,000 or up to five years in prison.

In addition to statutory penalties, a failure to comply with EPCRA reporting obligations could also contribute to more far-reaching physical and financial harm. If a landlord or tenant fails to notify emergency response agencies that hazardous chemicals are stored on-site, the fire department may not take necessary precautions in the event of an emergency. In those cases, the fire could result in bodily injury or extensive property damage that could have been avoided. Moreover, the building owner and the tenant may both find themselves the subject of personal injury or other lawsuits alleging that a responsible party's failure to properly notify emergency responders about the presence of hazardous chemicals at the facility constitutes negligence.

Because of the importance of clarifying the parties' respective responsibilities, the notion of drafting lease language to assign this responsibility to one party or the other is attractive. It is important to bear in mind also that the EPA has taken the position that private parties cannot, by contract, exempt themselves from direct liability under the EPCRA. It is, therefore, essential for parties that wish to fully insulate themselves from exposure to liability relating to the failure to comply with emergency planning obligations to seek strong indemnifications from the other party that include attorneys' fees. The indemnification language should, at a minimum, cover statutory penalties as well as physical harms that are exacerbated by a failure to report the presence of hazardous chemicals stored on-site properly. It would also be advisable to insist that the indemnifying party obtain general liability insurance or provide a bond or letter-of-credit in order to secure those obligations specifically. Finally, parties should consider including a provision in the lease that allows for the inspection of both the facility and the responsible party's records for purposes of determining compliance with applicable recordkeeping and reporting obligations. In the case of large-scale leasing arrangements, property managers may wish to retain a third-party consultant to conduct regular audits of the facility in order to ensure compliance with all applicable requirements.

Conclusion

Landlords and tenants may find it beneficial to evaluate their facilities to determine whether they are subject to reporting obligations. If, in fact, the owner or operator of a facility discovers that it has been remiss in fulfilling those obligations, it would be wise to seek assistance of legal counsel to determine whether it would be advantageous to utilize the EPA's audit policy to self-report this non-compliance.

Kathryn M. Long practices in Schiff Hardin's Lake Forest, IL, office, where she concentrates her practice in environmental law matters. She may be reached at [email protected] or 847-295-4324.