environmental compliance and sustainability in the retail industry sean m. sullivan williams mullen...

Environmental Compliance and

Sustainability in the Retail Industry

Sean M. SullivanSean M. Sullivan

Williams MullenWilliams Mullen

301 Fayetteville Street, Suite 1700301 Fayetteville Street, Suite 1700

Raleigh, NC 27601Raleigh, NC 27601

(919) 981-4312(919) 981-4312

[email protected]@williamsmullen.com

Major Topics

• EPA Enforcement Priorities and Trends

• Considerations for Compliance Auditing

• Vapor Intrusion at Brownfields Sites

• Disaster Planning

• Sustainability In Retail

EPA Enforcement Priorities and Trends

• Stormwater

• Hazardous Air Pollutants

• Underground Storage Tanks

• Hazardous Waste Issues

• Recent Enforcement Cases involving Retailers


• EPA’s Nationwide Priorities for FY 2010-2013 include:– Stormwater compliance (construction

and industrial).– Emissions of air pollutants from boilers

and generators.– Underground Storage Tanks.


• Stormwater Compliance– Construction sites continue to be a high

priority for EPA.– Depending on the structure of a

development transaction, anchor stores may find themselves as permittees for stormwater discharges.• The owner of a construction site is

usually the target of enforcement.


• Stormwater Compliance– Can be a major source of pass through

costs in leases.• In NC, DENR has proposed rules that

require commercial developments to retrofit pollution controls due to water quality problems in a Raleigh lake.

• Landlords may be able assess tenants for those costs.


• Stormwater Compliance– In Chesapeake Bay Watershed, state

and local governments will be forced to install additional controls and meet stricter discharge limits.• Higher utility fees and taxes.

• Local governments may also impose additional regulations to meet these stricter limits.


• Hazardous Air Pollutants– EPA issued new emissions rules for industrial

and commercial boilers in early 2011.• Apply to both major and minor sources of HAP

emissions.• Operators of heating boilers (for example)

have varying compliance obligations based on:

– Type of fuel source– Whether they emit more than 10 tpy of any

one HAP or 25 tpy of all HAPs.


• Hazardous Air Pollutants– Generators

• All “non-emergency” generators are regulated.• Emergency generators installed after June 12,

2006 are regulated.• Emissions and fuel limits, records, notifications.• Generators can become non-emergency if:

– New generator is used for demand management or is part of a financial arrangement with a third party.

– Existing generator runs > 15 hours per year for demand management or demand shaving deal.


• Underground Storage Tanks– Not only an issue for retail operations but also for

distribution centers.– Leak detection, recordkeeping and reporting of

potential releases are primary requirements.• Have had several cases where maintenance staff ignore a

faulty sensor because others are working or ignore release alarms because other parts of system indicate no release has occurred.

• You have to fix the faulty sensor or resolve the source of the release alarm, or it’s a violation.

• EPA hits parties hard for not reporting failed leak detection tests.


• Hazardous Waste Issues– Pesticides, paint, batteries and fluorescent light

bulbs are all hazardous waste when disposed or sent for recycling.

– Some of this material must be managed as hazardous waste and some can be managed as universal waste.

• Standard procedures are an easy way to ensure these materials are handled properly.


• Hazardous Waste Issues– Procedures should not be too generalized.

• Had a case where a client treated any spill of any material with an MSDS as hazardous waste.

• Changed some operations at a distribution center and had a number of spills in one month.

• Between the normal amount of hazardous waste generated, they crossed the LQG threshold one month.

• Had an inspector come through a month later and the facility was not in compliance with LQG rules.

• Could have avoided the violations by not treating absorbents as hazardous waste automatically.


• Federal Enforcement Data– Available in the ECHO database.– Trends over the last five years

• A number of retailers were caught in the silly string cases.

• Numerous retailers have had generator-status violations

• UST violations for gasoline sales, retail distribution centers, and generator fuel.

• Failure to have and comply with Spill Prevention Control and Countermeasures Plans.

• Construction stormwater enforcement cases.


• Interesting Individual Enforcement Cases– Operation of large capacity cesspools in

Hawaii.• Highlights risks in relying on state guidance.

– Releases of hydraulic fluid containing PCBs from a shopping mall elevator.

• Neither retailer nor mall owner cleaned up known spills of fluid.

– Failure to repair known refrigerant leaks at retailer’s corporate offices (multiple locations).

• Violations can occur anywhere.


• Pesticide / Product Labeling Issues– If a product’s labeling claims to control pests, it

must be registered as a pesticide.– Distribution of an unregistered pesticide in

commerce is a violation of FIFRA, and enforcement actions against retailers are common.

• Situation also forces retailers to remove large quantities of merchandise from shelves.

– Recent example is mold and mildew cases.


• Mold and Mildew Cases– Critical question is whether the product

claims the ability to control a living organism.

– Claim to prevent “mold and mildew” can only be made for registered pesticide.• Safeway paid a $600K civil penalty for

this type of claim on its house brand toilet bowl cleaner.


• Mold and Mildew Cases– Compare Safeway claim to:

• Claim to prevent mold and mildew stains.

• Claim to clean and remove mold and mildew stains.

• Claim to prevent tough odors.

• EPA has a fact sheet for cleaning products on its website.

Major Topics






Considerations for Compliance Auditing

• Basic Truth – EPA does not recognize any “audit privilege” created by state law. – Audit reports will be admissible as evidence in

any federal proceeding.

• Exception – Attorney-client privilege and attorney work product doctrines.– If a consultant prepares the report in order to

allow an attorney to provide legal advice, the report is protected from disclosure.


• Running compliance audits through internal law departments provides a cost effective means of keeping reports confidential.

• Select an attorney whose role in the company is clearly legal.– To the extent a lawyer functions in a business

role, there is an argument no privilege exists.– Using outside counsel eliminates this risk.


• Maintain the confidentiality of compliance audit reports.– Limit availability in document

management system and distribution among employees.

– Extent of permissible distribution varies.– Disclosure during transactional due

diligence can waive privilege.

Major Topics






Vapor Intrusion at Brownfields Sites

• Trend towards urban redevelopment commonly involves sites with environmental contamination.

• Certain types of groundwater contaminants produce gas that rises through the soil to the surface.– Typically chlorinated solvents, dry-cleaning

chemicals and gasoline.– Result is indoor air quality problems.


• Many states follow EPA’s 2002 guidance on vapor intrusion.– Lays out a multi-tiered process for

evaluating whether groundwater contamination poses a vapor risk.

– Depending on site-specific factors, soil gas sampling and then indoor air sampling may be warranted.


• States are finding that the screening levels in the 2002 guidance are not conservative enough.– Reopening closed sites to evaluate human

health risk.– NC has initiated a fundamental re-evaluation of

its vapor intrusion program.

• Immediate indoor air sampling is not a good idea, though.– Soil gas sampling is the better approach.

Major Topics






Disaster Planning

• Has been an issue recently in North Carolina with the tornado outbreak.

• Environmental issue is disposal of materials in a store that are damaged or destroyed.

• Two major concerns:– Products.– Building and its fixtures.

Disaster Planning

• Product Disposal– Examples – Pesticides, paint, CFL light

bulbs.– If these materials are in an area that’s

unsafe to enter, building demo may cause releases.

– Depending on store configuration, spilled materials can enter storm drains and be released to surface waters.

Disaster Planning

• Building and Fixture Disposal– Fluorescent lighting.– Older buildings with asbestos.– Lead-based paint.

• Regulatory problem – the mixture rule.– Rule – if one mixes hazardous waste

with non-hazardous waste, the entire mixture is now hazardous waste.

Disaster Planning

• Mixture Rule Problem– Application of the rule is within the

state’s regulatory agency’s discretion.– Key is convincing the regulator you

have not intentionally mixed hazardous and non-hazardous waste.• Minimize the potential for additional

releases after the event has concluded.

Disaster Planning

• There are a number of studies regarding debris disposal after Katrina.

• As a result, EPA has directed states to develop debris management plans, which include staging areas for different classes of materials.

• Private businesses are still responsible for disposing of their own debris, but understanding the local plan may help facilitate disposal and rebuilding.

Disaster Planning

• Post-Katrina Enforcement Cases– Improper disposal of asbestos.– Dumping of materials in unpermitted

locations.– Improper management of fluorescent

light bulbs and ballasts.

• Key is understanding what you have in your store and how it needs to be managed ahead of time.

Major Topics






Sustainability in Retail

• EPA’s Definition of Sustainability – going beyond your regulatory obligations to protect the environment.

• Five Major Areas for Retail Industry– Buildings and Infrastructure– Facilities Management– Transportation/Logistics/Supply Chain – Merchandising (Packaging)– Customer Programs


• Buildings and Infrastructure– Advanced Refrigeration to avoid ozone depleting

substances.• Benefit of avoiding regulatory requirements

under CAA, but ammonia-based systems have their own rules.

– Building materials and designs that limit energy use and use materials with lesser environmental impact.

• Leases should be written to allocate savings to entity that bears the cost.


• Smart Growth – use of brownfields properties for new stores to reduce sprawl.

• Green Infrastructure – design sites with less impervious surfaces to reduce pollutant loads on utilities and volume of stormwater discharge.


• Facilities Management– Selecting boilers with greater energy

efficiency ratings and potential for cogeneration.

– Limit amount of fats, oil and grease you discharge to sewer system.

– Landscaping to maximize pervious surface and minimize need for fertilizer and pesticide.


• Transportation and Supply Chain– Encourage public transportation use

among employees.– Alternative fuels for fleet vehicles.


• Merchandising– Life Cycle Analysis – concept of

evaluating the entire life of a product (from manufacture to ultimate disposal).• Identify products with lower carbon

footprint.

• Select offerings that limit use of hazardous chemicals during production.


• Merchandising– Packaging

• Activist shareholder groups have been advocating shareholder resolutions to stop retailers from using PVC-based packaging.

• Problem of plastic bags.– Supply Chain Management

• Selecting products whose life cycles have less environmental impact.

• Problem of enforcement of vendor contracts (ex – Silly String Cases)


• Supply Chain Management– Lacey Act Amendments of 2008

• Prohibits the import or distribution in commerce of any plant harvested in violation of federal, state or foreign law.

• Also applies to certain products containing plants; phased in over time.

• Again, the problem of controlling the sources of raw materials and enforcing contractual provisions.


• Consumer Programs– E-Waste

• 20 States currently have programs requiring recycling of this material.

• Hazardous substances in electronics include: lead, cadmium, lithium, nickel

• Examples

– California treats it as state-only hazardous waste

– North Carolina requires manufacturers to establish recycling programs.

• Retailers can establish collection programs for their customers.

Contact Information

Sean M. Sullivan

Williams Mullen

301 Fayetteville Street, Suite 1700

Raleigh, NC 27601

(919) 981-4312

[email protected]

environmental compliance and sustainability in the retail industry sean m. sullivan williams mullen...

Documents

target of enforcement

retail slide

trends considerations

epa hits parties hard

universal waste

environmental compliance

emissions of air pollutants

stormwater discharges