EPA's Scrutiny

Earlier this year, the Environmental Protection Agency (EPA) mailed letters to many telecommunications companies alerting them of a recent settlement it reached with GTE in resolving potential environmental compliance concerns. The GTE settlement resolved 600 violations at 314 of its sites. GTE took advantage of EPA's Self-Disclosure Policy, under which the agency waives penalties for violations that a company voluntarily discloses. As a result of GTE's prompt disclosure of violations, voluntary audit and expeditious correction of violations, GTE received a waiver of approximately $2.4 million in penalties. GTE paid only a $52,000 penalty commensurate with the economic benefit it received for delayed compliance.

GTE admitted that it had failed to notify state agencies and local fire departments of sulfuric-acid-filled batteries at a number of sites, in violation of the federal Emergency Planning and Community Right-to-Know Act (EPCRA). GTE also disclosed that it had violated the Clean Water Act by failing to develop Spill Prevention Control and Countermeasure (SPCC) plans for a number of facilities that store diesel fuel.

The GTE settlement is an excellent model for national companies that want to come forward and resolve multiple federal violations at one time. Since the GTE settlement, at least two other carriers have conducted environmental audits and are in the process of making disclosures under EPA's Self-Disclosure Policy. This serves as a wake-up call for many wireless carriers that may not be paying enough attention to environmental issues during build-out.

EPCRA The requirements GTE violated are quantity-based and apply only because the amount of hazardous chemicals at a facility exceeded the threshold stated in the rule. The EPCRA requirement is strictly a disclosure statute. It requires a carrier to file information about the presence of a chemical but does not regulate the use, storage or disposal of the chemical. It was enacted in 1984 after a deadly chemical spill in Bhopal, India, and is intended to provide public and emergency-response personnel with information about hazardous chemicals stored in each community.

Under Sections 311 and 312, the owner or operator of any facility that has on-site (at any one time) 500 pounds or more of a chemical on EPA's list of "extremely hazardous substances" is required to file information about the quantity and specific location of the chemical.

Sulfuric acid, which commonly is found in batteries at transmission sites, is one of the chemicals on this list. The statute exempts listed chemicals when they are present in a manufactured article and cannot be released into the environment. However, EPA has determined that the exemption does not apply to liquid chemicals contained in batteries because batteries have the potential to leak. As a result, the requirements of Section 311 and 312 apply to any site where the weight of sulfuric acid in all of the batteries totals 500 pounds or more. Although this is a relatively large quantity of acid, GTE found that 229 of its sites exceeded the threshold.

Sections 311 and 312 require the facility owner or operator to file a copy of the Material Safety Data Sheet (MSDS) for the regulated chemical with the local emergency planning committee, the state emergency-response commission and the local fire department. This is a 1-time filing. The facility also is required to file (with the same three offices) an annual inventory report, which provides information about the amount and location of the chemical and the hazards it poses. The annual inventory is due on March 1 of each year.

SPILL PREVENTION The second set of requirements at issue in the GTE settlement was the spill-prevention rules under the Clean Water Act, which apply to business facilities that store oil (including diesel fuel, gasoline and waste oil) in tanks or drums.

Typically, diesel fuel is used to power backup generators at transmission sites. EPA requirements apply to the owner or operator of the tank or drums.

If a facility has an above-ground oil tank with a capacity of more than 660 gallons or multiple above-ground tanks with a combined capacity of at least 1,300 gallons and is located where a spill from the tanks could reach a waterway, such as a river, lake or stream, the owner or operator must prepare a written SPCC plan. (Underground oil tanks with a combined capacity of at least 42,000 gallons also trigger the rules.)

The regulations apply only if the facility could discharge a "harmful quantity" of oil into a waterway. However, a harmful quantity includes any amount of oil that can create a sheen on the water's surface.

If a facility is subject to the SPCC rules, it must prepare and keep a written spill-prevention plan on site. The carrier must keep the plan at the site of the tank if it is attended at least eight hours a day. Otherwise, the carrier must keep it at the nearest field office. The facility does not have to file the plan with any governmental authority but must be able to produce it during an EPA inspection. The SPCC plan must demonstrate how the facility would prevent spills during the transfer of oil to or from the tank and during routine use of the tank. It also must show that the owner or operator of the tank inspects the tank regularly and trains its employees to operate the tank properly. A registered professional engineer must certify the plan, and the facility must update it every three years.

Potential penalties for environmental violations are heavy. Under EPCRA, the maximum civil penalty for failing to submit an MSDS for a regulated chemical is $10,000 per violation. The maximum penalty for failing to file an annual inventory form is $25,000 per violation. The statute also says that for each day a violation continues, another violation accrues.

Penalties for violations of the Clean Water Act are similar. The maximum civil penalty for failing to prepare an SPCC Plan is $25,000, and each day of non-compliance constitutes a separate violation.

EPA'S SELF-DISCLOSURE POLICY GTE faced potential penalties of $2.38 million for the violations at its facilities, but paid just $52,264 because it used the Self-Disclosure Policy to admit its violations and seek a reduced penalty. The Self-Disclosure Policy, which went into effect in 1996, is intended to encourage companies to audit their own facilities and to disclose and correct violations. It consists of nine criteria. For example, the company must discover any violations voluntarily (before the EPA or a delegated state agency inspects the facility). The company also must disclose the violations to the EPA in writing within 10 days of the discovery. The company must correct the violations within 60 days. If the company meets all nine criteria under the policy, the EPA will waive the entire potential penalty for the violations except for the amount of economic benefit it believes the company derived from non-compliance.

Economic benefit is considered in the penalty because a company that violates a rule avoids the cost of compliance and obtains an unfair advantage over its competitors that comply. The economic benefit portion of the penalty consists of the economic saving the violator obtained by delaying and/or avoiding compliance. When the economic benefit is insignificant, the EPA typically will waive that portion of the penalty as well and will resolve the case with no monetary fine.

The $52,264 penalty in the GTE settlement represented EPA's estimate of the economic benefit GTE gained by delaying the preparation of more than 500 EPCRA filings and nearly 100 SPCC plans for the facilities that failed to comply.

Although GTE entered a settlement agreement with the EPA to address the violations at its sites, resolution of liability under the Self-Disclosure Policy can be far less formal. The agency often does not require a settlement agreement. Instead, it will issue a Notice of Determination letter, which recites how the potential violations have been resolved. The letter has an agency docket number and is available to the public but otherwise is far quicker and simpler than a settlement agreement.

Overall, Self-Disclosure is an attractive option for a carrier that finds that it has violated EPCRA or the SPCC rules. An alternative approach simply would be to file the overdue EPCRA reports or prepare the required SPCC plans. However, there is a risk with this approach that the delay in filing may still become the subject of an enforcement action. If the agency brings such an enforcement action, the company could face the full penalty assessment under the relevant statutes, including per-day multipliers.

Finally, carriers should realize that the wireless industry currently is the focus of heightened EPA scrutiny. According to officials, if the agency discovers environmental violations during an inspection or as a result of an inquiry letter, the carrier will not be eligible for reduction of the penalty because the violations would not be voluntarily discovered under the Self-Disclosure Policy.

According to the EPA, disclosure after the 10-day deadline is the most common reason to deem a company ineligible for penalty reduction under the Self-Disclosure Policy. Although a company can file multiple disclosure letters as it receives its audit results, EPA states that "where a violator discovers a violation at one facility but there is reason to believe that similar violations may have occurred at other facilities, the potential violations at all facilities must be disclosed to EPA within 10 days of the initial discovery." This means that each time a company discovers a violation, it must decide whether any of its other facilities are similar enough to the first to require disclosure of additional potential violations. According to the EPA, the company should err on the side of disclosure and correct any disclosure errors (for example, a facility that was disclosed but turned out to be compliant) after the audit is complete.

Owners/operators whose facilities have lead/acid batteries are required to determine whether Tier Two reporting thresholds are exceeded:

*The reporting threshold for pure sulfuric acid is 500 pounds.

*In addition, if the weight of all of the reportable batteries exceeds 10, 000 pounds, then these batteries must be listed on the Tier Two report separately from the sulfuric acid.

You should survey all facility equipment and systems containing reportable batteries to determine whether the reporting thresholds are exceeded for the total weight of pure sulfuric acid contained in all of the reportable batteries and the total weight of all of the reportable batteries.

To determine if thresholds are exceeded, you will need specific information regarding the weight of the battery, the percent of electrolyte contained in the battery and the percentage of sulfuric acid present in the electrolyte solution. Usually, you can obtain this information from the battery manufacturer or supplier, the battery label, or the Material Safety Data Sheet for the battery.

Research indicates that the quantity of sulfuric acid in batteries varies from one brand to another. The weight of electrolyte in batteries can range from 10% to 45% of the total weight of the battery, and the weight of sulfuric acid in battery electrolyte ranges from 20% to 40%.

If the percentage or concentration of electrolyte is not available for your battery brand, you estimate the weight of sulfuric acid.

In this case scenario, you would be required to report the sulfuric acid (because the weight of sulfuric acid exceeds the 500-pound threshold), but would not be required to report the batteries (because the weight of the batteries did not exceed the 10,000-pound threshold).

Note that if a threshold is exceeded at any time during the year, you must report the materials that exceed the threshold.

Source: The Texas Department of Health Hazard Communication Branch

You may have many questions regarding the EPA's Self-Disclosure Policy. Here are answers to a few of the most commonly asked questions.

*When does a company have to disclose to EPA that a violation "may have occurred?"

The regulated entity must disclose violations when there is a reasonable basis for concluding that violations may have occurred. When the facts underlying the violation are clear, but the existence of a violation is in doubt because of different law interpretations, the regulated entity should disclose the potential violations.

*Why must disclosures be in writing and to EPA?

This protects both EPA and the submitter by eliminating any uncertainty about the timing and content of the disclosure, and it expedites EPA's process of evaluating claims for penalty mitigation.

*Must the specific conditions of the final Audit Policy be met to qualify for penalty reductions, or is consistency with the general thrust of the policy sufficient?

The specific conditions must be met. If they are not met, EPA will use the flexibility provided under its statute-specific penalty policies to recognize good faith efforts and determine the extent to which penalty reductions are appropriate.