Food Safety Magazine

FSM eDigest | August 2, 2016

New Federal Initiatives Target Food Industry Facilities for Inspection and Enforcement

By Tom Boer, Esq., and Sam Brown, Esq.

New Federal Initiatives Target Food Industry Facilities for Inspection and Enforcement

Recent federal environmental initiatives mean that the food industry will see an increase in inspections, new regulations for those sectors of the industry that rely on large quantities of hazardous substances—such as ammonia for refrigeration or chlorine for food processing—in their operations, an uptick in expected enforcement actions and increased crossover between investigations conducted by the U.S. Environmental Protection Agency (EPA) and the Occupational Safety & Health Administration (OSHA). As a result, industry should act proactively to assess environmental compliance at their facilities and reduce the risk of enforcement by the government.

Food Industry in the Crosshairs under New EPA Enforcement Initiatives
EPA selects enforcement initiatives based upon its identification of “national environmental problems where there is significant noncompliance with laws, and where federal enforcement efforts can make a difference.” For the first time in 5 years, EPA selected new National Enforcement Initiatives that will direct EPA resources beginning in October 2016. EPA has announced seven enforcement initiatives, including two new initiatives and the continued pursuit of five of its prior initiatives. Three of EPA’s initiatives—including both of its new initiatives—are expected to target facilities in the food industry.

For the first new initiative, EPA has announced that it will focus enforcement priority on certain industries—including food processing—to reduce the unauthorized discharges of industrial wastewater. This initiative will target facilities that discharge wastewater directly to waters of the United States and are permitted pursuant to the Clean Water Act’s (CWA) National Pollution Discharge Elimination System (NPDES) and those facilities discharging to publicly owned treatment works (POTWs). EPA has said it will focus on a national approach to enforcement, particularly focusing on companies that operate in more than one state.

EPA will target wastewater enforcement by increasingly using electronic water pollution data. For example, EPA’s recent NPDES Electronic Reporting rule mandates electronic compliance monitoring reporting to provide regulators with a timelier and nationally consistent set of data about industrial wastewater discharges. EPA has also directed states to provide EPA with electronic copies of inspection reports, violation determinations and Discharge Monitoring Reports by December 21, 2016. Access to large volumes of electronic information will allow EPA to review more data from multiple facilities and across multiple jurisdictions.

EPA, via its second initiative, will increase efforts to prevent catastrophic accidents and explosions that threaten employees and emergency responders, and release chemicals that threaten human health and the environment in neighboring communities. This initiative is particularly relevant to food facilities with large ammonia refrigeration systems. In fact, in early 2015, EPA issued an enforcement alert to facilities with ammonia refrigeration systems that warned of increasing risk of inspection and enforcement. As expected, inspection of large ammonia refrigeration systems has increased over the past 12 months and, in some states, EPA has set a goal of inspecting every facility with an ammonia system.

This initiative, however, is not limited to ammonia refrigeration systems. Any facility using large quantities of potentially hazardous substances will be subject to increased risk of inspection. This initiative extends to a number of other food-related operations, including, for example, facilities using chlorine as a bleaching agent for flour production. EPA will target the prevention of accidents by increasing inspections to ensure that facilities are conducting required training, maintaining equipment and otherwise meeting the requirements of the Clean Air Act Section 112 Risk Management Plan (RMP) Program. EPA has announced that it will particularly focus on facilities located in low-income and minority communities.

Finally, EPA will continue to target concentrated animal feeding operations (CAFOs) that the agency believes may impair natural resources or adversely impact communities. EPA has indicated that it will implement new tools to identify potential violations from CAFOs, including the use of instream monitoring systems to trace waste discharges. Where enforcement actions are brought, EPA has said that it may require the use of new nutrient recovery technologies as part of settlements.

EPA May Impose Additional Regulation on Facilities via Revision of Its Risk Management Program
Dovetailing with its RMP enforcement initiative, EPA recently proposed significant changes to the accident prevention, emergency response and hazard information requirements imposed under the RMP Program. If adopted, these changes could increase the burden on regulated facilities. For example, the proposal would require regulated facilities to conduct root-cause analysis in the event of any “near-miss” release of hazardous substances such as ammonia or chlorine. The proposal would also require retention of outside “independent” consultants to conduct investigations and audits and would not allow facilities to use those same consultants routinely or to implement any required corrections. In addition, “nonresponding” facilities (i.e., those that currently rely upon local agencies to respond to accidental releases) would face additional requirements and, in some circumstances, be required to develop their own emergency response system. The cost to design, construct and operate an emergency response system would be a significant burden for companies. It is expected that EPA will try to finalize the proposed RMP requirements by the end of the year.

Department of Justice Worker Endangerment Initiative
The Department of Justice (DOJ) has concluded that companies suspected of mistreating employees are more likely to be out of compliance with environmental regulations. As a result, in late 2015, DOJ announced a new policy of coordination with OSHA to jointly pursue worker safety and environmental cases. In support of this effort, DOJ transferred authority to pursue worker safety cases to the Environmental Crimes Section. At a recent conference, John Cruden—the assistant attorney general for the Environment and Natural Resources Division—explained that DOJ environmental prosecutors will “work with several Department of Labor offices, including [OSHA] to investigate and prosecute worker endangerment violations.” Worker safety violations are now more likely to be accompanied by an assessment of environmental compliance and result in joint enforcement actions by DOJ. 

EPA Seeks Substantial Penalties for Environmental Violations at Facilities in the Food Sector
Three recent cases—all settled in the last 6 months—illustrate the magnitude of penalties and injunctive relief being sought in federal enforcement actions targeting the food industry.

EPA recently resolved an enforcement action against a sugar beet processing facility for alleged violations of its NPDES permit. EPA alleged that the facility discharged 28 million gallons of wastewater in violation of permit conditions over the course of a year. The settlement required the facility to pay a $1 million civil penalty and undertake approximately $5 million in injunctive relief to prevent future violations. These types of enforcement actions, targeting NPDES permit violations, are likely to increase under EPA’s new enforcement initiative and as EPA is able to analyze large volumes of data via the increased collection of electronic information.

EPA is also focusing on facilities that may not have an NPDES permit, but indirectly discharge wastewater through the sanitary sewer system for treatment by POTWs. The CWA pretreatment program is not an area that has been pursued aggressively by EPA in the past and, as a result, some companies may be caught off guard by the increased scrutiny and enforcement. The penalties for violations of industrial discharge requirements, however, can be substantial. For example, EPA recently settled claims against a large Pennsylvania brewer involving multiple alleged violations of pretreatment requirements at two facilities. In addition to a civil penalty of $2.8 million, the settlement required the company to conduct environmental audits, construct a new biological treatment system and take other compliance steps at an anticipated cost of about $7 million.

Even violations that many companies might consider to be “paperwork” in nature can result in substantial penalties. For example, EPA recently brought an enforcement action for alleged RMP violations against a potato processing plant operating an ammonia refrigeration system. There was no release of ammonia, but EPA alleged that the system was not maintained in a manner consistent with generally accepted good engineering practices and that the facility did not have an adequate emergency response program. Although the company was small and privately held, EPA still required a settlement costing nearly $150,000.

Steps Facilities Can Take to Decrease Risk
EPA’s announcement of its enforcement initiatives highlights where the agency will target its limited enforcement budget in the coming years. This is a new status quo and, as a result, facilities should not assume that the lack of recent inspections or the failure of regulators to pursue exceedances previously reported under various permitting programs means they will not be subject to enforcement. The publicizing of EPA’s enforcement priorities provides companies with an advance opportunity to prepare for increased scrutiny, address environmental compliance issues and decrease the risk of enforcement.

Regulated facilities should prepare for potential federal inspections. For example, facilities should designate personnel to interact with inspectors and compliance documents should be checked for thoroughness and consolidated in easily accessible locations.

Regulated facilities should also take this opportunity to proactively identify and correct any compliance deficiencies. For example, facilities with any wastewater discharge should evaluate compliance with discharge requirements and take immediate steps to correct any deficiencies. Similarly, facilities subject to the RMP Program should comprehensively assess their chemical accident prevention programs and track EPA’s ongoing rulemaking to incorporate any new requirements. More generally, companies should consider a third-party audit in consultation with legal counsel. Such audits can identify areas requiring further compliance efforts and, if deficiencies are identified, facilities may also benefit from working with counsel to self-report any noncompliance to EPA.

Tom Boer, Esq., is a partner in the San Francisco office of Hunton & Williams LLP. He represents private companies, utilities and individuals in federal and state environmental litigation and in defense of environmental enforcement actions and citizen suits. He formerly worked in the Environmental Enforcement Section at the Department of Justice.

Sam Brown, Esq., is a senior attorney at the San Francisco office of Hunton & Williams LLP. His practice focuses on environmental and administrative law. He formerly worked for EPA.

Categories: Regulatory: Audits/Certification/GFSI, Inspection