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EPA Targets the Food Industry for Enforcement Action

April 8, 1997

Citing a growing interest in food safety issues generally -- particularly in light of the Food Quality Protection Act of 1996 -- the U.S. Environmental Protection Agency ("EPA") has begun to lay the groundwork for a new multi-year enforcement initiative against the food industries, including the adjunct food packaging industries. At this time, the industries we believe will be chosen for this enforcement initiative all come under the general Standard Industrial Classification ("SIC") Code 20 ("Food and Kindred Products"). This Alert is intended to inform you of the requirements and issues that could arise as a result of this effort.

EPA is Looking for EPCRA Violations

Although EPA has not described the full scope of its enforcement initiative, the Agency has indicated its interest in pursuing those food companies that have not filed one or more reports required by the Emergency Planning and Community Right-to-Know Act of 1986 ("EPCRA"). EPCRA, also known as "SARA Title III" because it was passed as part of Superfund reauthorization in 1986, was the congressional response to the December 1984 tragedy in Bhopal, India, in which an accidental release of methyl isocyanate gas from a Union Carbide plant manufacturing pesticide killed more than two thousand people and injured more than 100,000. EPCRA, however, applies to a host of activities relating to compounds much less toxic than methyl isocyanate.

The general purpose of EPCRA is to require certain "facilities" to keep records and to report to state and local authorities, as well as to EPA, information about the presence, and/or any release into the environment, of any "hazardous chemical" for which the facility is required to keep a Material Safety Data Sheet ("MSDS") under OSHA's Hazard Communication Standard ("HCS"), any "toxic chemicals" as defined by rule, and any "extremely hazardous substance" also as defined by rule. The salient features of EPCRA and EPCRA compliance are:

1. EPCRA on Hazardous Chemicals

A facility in any industry - including the food industry - is required to report the presence of a hazardous chemical by providing to state and local emergency planning committees, as well as the fire department with jurisdiction over the facility, a copy of each MSDS it is required to have on hand and an inventory of such chemicals. EPCRA tracks the OSHA HCS by exempting from the category of "hazardous chemicals" any food, food additive, or color additive regulated by FDA (however, any hazardous chemical used by a food company – such as a solvent, cleanser, or process catalyst – is not so exempt). EPA's enforcement initiative does not spotlight these MSDS and inventory reporting requirements; nevertheless, it should be expected that any investigation by EPA will include a review of compliance with these requirements.

2. EPCRA on Toxic Chemicals

Annually on July 1, a facility falling into the primary SIC Codes 20-39, is required to report to EPA and to state authorities a "Form R" for each toxic chemical that, in the year preceding the report, the facility manufactured or processed in excess of 25,000 pounds or "otherwise used" in excess of 10,000 pounds. The Form R requires a facility to estimate the amount of such chemicals released into the environment. The information contained in Form R is publicly available and becomes part of EPA's Toxics Release Inventory ("TRI"). Significantly, the TRI provides information about toxic chemical releases, whether or not accidental, and even if the releases are in compliance with laws and permits. Form R reporting appears to be the major object of EPA's new enforcement initiative.

3. Penalties Under EPCRA

EPCRA contains hefty civil (and criminal) penalties for failure to comply. The statute authorizes a civil fine of $25,000 per day per violation of the statute's reporting requirements (although, as noted below, EPA has put in place various penalty policies that, by and large and where applicable, tend to mitigate the harshness of the statutory maximum). In addition, a "citizen suit" provision authorizes citizens to pursue violations of EPCRA if EPA chooses not to do so. Last summer, the Federal Court of Appeals for the Seventh Circuit held that citizens may sue under EPCRA even after violators have submitted overdue filings. Citizens for a Better Environment v. The Steel Co.,90 F.3d 2069 (7th Cir. 1996). In that case, the facility filed overdue reports upon receiving notice from concerned citizens that it was in non-compliance with EPCRA. The Seventh Circuit held that the late submission did not shield the facility from penalties sought by citizens, citing broad statutory phrases to conclude that, because Congress meant to place great importance on timely reporting, a citizen suit remains viable to address the timing failure even if information is ultimately reported to EPA. The Seventh Circuit's rule in The Steel Co. is at odds with the rule in other jurisdictions, notably the Sixth Circuit. It is likely that, for this reason, the United States Supreme Court recently agreed to review the Seventh Circuit's decision. The bottom line: EPCRA non-compliance can be very expensive; timely reporting is the key to avoiding such expense.

EPA May be Looking for Other Violations As Well

While EPA's initiative appears to be aimed at EPCRA, the EPA department handling the initiative has an agenda that is markedly broader, including compliance with the Toxic Substances Control Act ("TSCA"). TSCA regulates the manufacture (including import), processing, distribution, and use of "chemical substances," with the greatest emphasis being placed on their manufacture. While TSCA, like EPCRA, exempts food, food additives, and color additives from the general requirements applicable to TSCA "chemical substances," EPA takes an expansive view of its TSCA authority. In any investigation by EPA of a facility in the food industry, it is likely that the Agency will attempt to ascertain whether a chemical substance – regardless of its status under EPCRA – is being processed, distributed, or used in a manner inconsistent with TSCA, even if the chemical is not manufactured at the facility.

What to Do Before EPA Issues a Notice of Investigation or Violation Audit Now!

EPA has for many years adopted the use of penalty policies to assign penalties under various statutes, including TSCA and EPCRA, on the basis of the gravity of the violation and any mitigating factors that might effect a penalty reduction. Above all, EPA prizes self-reporting of a violation before a facility is aware that it is under investigation; it follows that EPA rewards self-reporting with relatively generous penalty discounts.

For many reasons, we recommend an audit of EPCRA and TSCA compliance be undertaken, even if a facility's compliance is generally good. It is better to advise EPA enforcement counsel that a violation slipped through an otherwise careful audit, than to be forced to pay a relatively higher penalty on the basis of not having commenced an audit at all. In this regard, an audit should be done under the auspices of an attorney to protect the audit protocol and its results as much as legally possible. In addition, an attorney is generally in a better position to guide you through the politics of self-reporting; we have found, for example, that self-reporting to headquarters in Washington, DC – rather than to the various regional offices around the country -- often yields more favorable results or even, on occasion, amnesty.

What to Do When EPA Sends the Notice or Knocks on the Door

Don't panic. But don't sit on a notice letter, either. It is prudent to contact counsel and to organize a small group of knowledgeable managers to begin the process of review and the development of a response and defense. Here again, EPA rewards prompt action by a facility in response to a notice of violation.

In the unlikely event that EPA knocks on your door with – or without – a search warrant, be courteous, but firm and businesslike; ask for a copy of the warrant and an opportunity to review it; and ask for the opportunity to consult with the company's lawyers. The lawyers will then take steps to obtain a stay of execution of the warrant and prescribe other steps to take in the event a stay is not immediately forthcoming.

This GT ALERT is issued for informational purposes only and is not intended to be construed or used as general legal advice. Greenberg Traurig attorneys provide practical, result-oriented strategies and solutions tailored to meet our clientsí individual legal needs.