While the biodiesel industry's focus on environmental regulatory matters understandably has been drawn toward critical path issues relating to fuel standards, it is essential that biodiesel manufacturing, terminal and transportation companies not lose sight of the complex and burdensome environmental regulatory compliance requirements that apply to their facilities, much as they do to other fuel refiners and handlers.
Federal, state and, in some circumstances, local laws and regulations provide for complex and costly permitting and controls on the emission of pollutants to the air and releases of pollutants through wastewater and stormwater discharges. They also provide for control over the generation, classification, handling and disposal of wastes. Further, they also provide management practices, planning and reporting relating to many types of hazardous materials, and permitting, registration, control, testing, monitoring, inspection, planning, prevention, training, reporting and recordkeeping requirements relating to all of the above.
Major Liabilities, Business Consequences
By themselves, the 30-plus volumes and tens of thousands of pages of highly technical regulations promulgated by the U.S. EPA would provide a daunting task for any industrial operator, without even considering the additional environmental requirements imposed by other federal agencies such as the Army Corps of Engineers, the Fish & Wildlife Service, the Occupational Safety and Health Administration, and the Department of Transportation. Also to be considered are the thousands of pages of new and revised environmental rules of all of the federal agencies that appear in the Federal Register each year, and the many divergent statutes, rules and revisions adopted or implemented by state legislators, environmental regulators and local bodies that possess equally important authority.
These environmental requirements are backed by federal, state and local inspection and enforcement powers that provide for penalties often running up to $32,500 for each day of each violation, cleanup obligations that can quickly reach into the millions of dollars and more, and criminal penalties, including both fines and imprisonment that can apply to many types of violations at the discretion of sometimes headline-minded prosecutors.
Facilities that fail to comply with environmental laws also can suffer restrictions on operations and difficulty in permitting new or revised projects or operations, increased inspection frequency by governmental authorities, negative media attention, greater opposition from community and environmental groups, and other burdens that would merit a strong preventative effort even if a company wasn't focused on pursuing a green business where such factors are arguably even more important.
Ongoing Compliance Requires Extraordinary Efforts
Given the complexity and consequences of these regulatory requirements, sound management of biodiesel facilities requires careful attention to compliance assurance efforts. Facility owners and operators that wish to avoid the severe liability and other consequences associated with environmental violations should carefully consider pursuing a strong program of environmental management starting with the employment of highly qualified internal and external environmental technical and legal experts to help design, administer and troubleshoot their compliance efforts. Maintaining compliance over time has other requirements.
Periodic "checkup" audits are essential. In addition to the ongoing efforts of qualified environmental personnel, the most essential component of a strong compliance effort may be periodic audits of a facility's environmental compliance status. It is important to realize that in the world of environmental compliance, there is no "finish line." Obligations are hourly, daily, weekly, monthly, quarterly and annual. Even under the best of circumstances, the applicable laws change, key people leave and regulated equipment breaks down.
Without frequent checkups, including periodic, comprehensive independent compliance assessments with the assistance of fresh, expert eyes, industrial facilities are doomed to overlook certain duties and fall out of compliance. It seems self-evident that periodic reviews of a facility's compliance with applicable environmental laws, regulations and permits would be helpful in identifying any gaps in compliance with performance. What may not be self-evident is that in the absence of such periodic audits, even where companies make a strong effort to comply, some of these complicated compliance obligations will always slip through the cracks.
As a note of caution, however, such auditing efforts should not be undertaken lightly. Companies should launch an audit only after consulting legal professionals experienced in environmental auditing to discuss the potential liability risks of uncovering and creating evidence of legal violations, the potential privileges that can be used to prevent adverse use of audit documents and information, appropriate strategies for correcting and documenting the correction of identified concerns, and the best ways of obtaining protection against certain liabilities through the careful application of federal and state programs that offer opportunities for leniency or immunity.
Maintaining compliance also requires systematic management approaches. Traditionally, most companies managed environmental compliance in a fairly informal manner by engaging the assistance of managers who were tasked with administering a facility's compliance efforts. While expert environmental managers are invaluable resources, contemporary trends have moved industrial facilities sharply toward more formal and systematic approaches to environmental management.
In the traditional model, the loss of an environmental manager to retirement, health problems or greener pastures would cripple a facility's compliance effort. To address this concern, and to better apply business management principles to the environmental discipline, leading-edge companies today more commonly approach these issues using a formal "environmental management system," or EMS, that begins with a strong board of directors or chief executive officer-level policy statement on environmental protection and compliance goals and follows through with strong measures in furtherance of continuous environmental improvement. The common elements of the dominant EMS model in use today include:
- Dissemination of a strong environmental protection and compliance policy statement from top company management
- Formal, documented annual or other periodic identification of a facility's critical interactions with the environment—regulated and otherwise
- Development of written, measurable objectives, targets and performance criteria respecting each of those environmental aspects including objectives relating to legal compliance
- Preparation and maintenance of written plans, programs and procedures for achieving those objectives and targets including, among other things, calendars and other programs to better ensure the timely completion of ongoing environmental regulatory responsibilities
- Specific, written assignment of environmental roles and responsibilities to different job descriptions and categories of personnel throughout the organization
- Documented training of all employees with environmental responsibilities on environmental procedures, requirements and objectives to ensure competency and understanding
- Periodic internal and independent auditing to confirm the effectiveness of environmental management, compliance and training efforts
- Systems for tracking and ensuring the documented, adequate correction and prevention of any gaps in environmental compliance or performance
- Programs of document control to help ensure not only that the facility is doing the right thing but that the facility can readily demonstrate that fact, and
- Regular management review and updating of the management system to ensure that it is serving its purpose effectively, with feedback from this review effort leading to completion of these EMS elements anew with updated policies, aspects reviews, objectives, procedures, responsibilities, training and audits undertaken in pursuit of a cycle of continuous environmental improvement.
Companies considering the adoption of a more formal EMS have the obvious potential to benefit from increased systematic attention to environmental efforts relative to companies that approach environmental management in a more informal or ad hoc fashion. A variety of potential policy and other incentives can also be available to companies that pursue formal, approved EMSs. Even companies that do not implement a full, formal EMS, however, can benefit from evaluating their current environmental management efforts relative to the EMS elements presented above, each of which may in their own right have significant merit when adapted for use at particular companies and facilities.
On the other hand, EMS efforts implicate numerous potential legal and liability concerns, from the legal issues associated with auditing to the establishment of written policies, procedures and statements of responsibility that might be used by adversaries as evidence to help establish corporate or individual tort liability or even criminal responsibility. Companies seeking to qualify for the legal and policy benefits of EMS—and to minimize the numerous potential legal and liability pitfalls that can be associated with the development and implementation of EMS elements— would do well to consult with an environmental attorney who is experienced with these systems and their ramifications as they pursue more systematic environmental management efforts.
It's Not Easy Being Green
Companies participating in the biodiesel industry should take pride in their efforts to make and distribute renewable fuels and to pursue the betterment of our environment. However, participating in a "green" industry by itself provides no assurance that a company or facility has satisfied the complex, costly and cumbersome regulatory requirements that apply to industrial facilities. Environmental compliance assurance requires a vigorous environmental management effort with the assistance of qualified technical and legal experts who can assist in the design and implementation of your environmental program. Periodic, comprehensive auditing of environmental compliance status and strong systems for environmental management are potentially costly and can be both difficult and risky to implement but, done right, these measures are essential for maintaining and demonstrating ongoing compliance with the complex environmental laws and regulations that govern your company.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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