EPA Enacts Major Overhaul to Hazardous Waste Generator Requirements

Late last year U.S. EPA enacted the "Hazardous Waste Generator Improvements Rule" which constitutes a major overhaul of the federal hazardous waste regulations (RCRA) that apply to any generator of hazardous waste.  The new rule impacts thousands of businesses, including even small generators of hazardous waste.  EPA estimates that between 424,100 and 676,900 facilities fall under regulation by the rule.

It is possible that the Trump Administration may try to undo the controversial rule as detailed in the previous post.  However, since the final rule has been published in the Federal Register (81 Fed. Reg. 85732) with an effective date of May 30, 2017 it will be more difficult for the new Administration to revoke the rule.

As to timing of these changes, the RCRA program is primarily administered by the states. Therefore, these major changes will not go into effect in Ohio or other delegated states until they are adopted in state rules which will likely not occur until sometime in 2018.

Here is a summary of some of the more notable changes.

Background on Generator Classifications

Generators of hazardous waste may accumulate certain quantities of waste and store hazardous waste on-site without triggering the need to obtain a permit as a Transporter Storage Disposal Facility (TSDF).  The ability to avoid TSDF status and be exempt from needing a permit has been a huge carrot for generators as it avoids more costly cleanup requirements (i.e. RCRA Closure and RCRA Corrective Action) as well as other more stringent regulatory requirements.

The chart below shows the accumulation and storage requirements under federal law for Very Small Quantity Generators (VSQG), Small Quantity Generators (SQG) and Large Quantity Generators (LQG):

Hazardous Waste Generator Requirements

VSQG SQG LQG
Monthly Generation (Per calendar month) up to 2.2 lbs acute hazardous waste or less than 220 lbs of hazardous waste (about 1/2 of a 55 gallon drum) up to 2.2 lbs of acute hazardous waste or between 220 to 2,200 lbs of hazardous waste (about five 55 gallon drums) up to 2.2 lbs of acute hazardous waste or 2,200 or more lbs of hazardous waste
Total Accumulation On-site up to 2.2 lbs of acute or up to 2,200 lbs of hazardous waste up to 2.2 lbs acute hazardous waste or between 220 lbs to 13,200 lbs of hazardous waste (thirty 55 gallon drums) up to 2.2 lbs of acute hazardous waste or equal to or greater than 13,200 lbs of hazardous waste
Accumulation Time None 180 days or 270 days if TSDF is more than 200 miles away 90 days

Click here for a link to an a detailed reference chart from Ohio EPA on RCRA Generator Requirements.  While the quantities and time periods applicable to the three categories of generators remained largely unchanged, the new rule contains provisions regarding the quantity of residues from cleanup of hazardous waste that can be generated under each generator classification.

Adopted- Loss of Exemption for Certain RCRA Violations

In the newly adopted rule, EPA places the RCRA generator regulations into two categories:

  1. Independent Requirements- a violation of regulatory requirement that subjects the violator to enforcement; or
  2. Condition for Exemption- regulations that must be met or the generator may lose its exemption from permitting requirements as a TSDF.  An example of regulations that are "conditions for exemption" include the generation and accumulation limits in the above chart.  However, the new rule expands this category to include other regulations.

The possibility of losing the exemption from TSDF requirements for more minor violations has huge implications for businesses who generate even small quantities of hazardous waste as well as those service companies that transport hazardous waste.  

In the preamble to the rule, EPA asserts this is not a major change because the federal EPA and delegated states maintain enforcement discretion.  However, with so much at stake with regard to triggering TSDF status EPA's statements in the Preamble provide little comfort to businesses.

Adopted- New Generator Classification- Very Small Quantity Generator (VSQG)

All regulations previously applicable to Conditionally Exempt Small Quantity Generators (CESQGs) will now apply to VSQGs.  

Adopted- Definition of Generator Knowledge and Testing Requirements

The new rule contains definitions of each generator classification- VSQG, SQG and LQG.  The new rule adds more detail as to how to determine whether a waste is deemed hazardous or non-hazardous using the company's knowledge of their processes that generate the waste (i.e. "generator knowledge") or through testing of the waste.

For potential characteristic hazardous waste, under the new rule generators must make the determination anytime in the course of the waste's management if its properties change.  Business commented that this could require constant re-evaluation of characteristic hazardous waste.

Adopted- Episodic Generation

One of the potential benefits of the rule is the flexibility provided to remain in the VSQG or SQG classification even if you have a one time episode which would push you into the higher generator classification (i.e. episodic events).  

A VSQG or SQG can have one episodic event per year (with an opportunity for a second).  The waste generated during the episodic event will not be counted toward your generation classification.  

Before taking advantage of the episodic generation provision, the company must notify either U.S. EPA or the delegated state program at least thirty (30) days prior to initiating a "planned episodic event" (i.e. periodic maintenance like a tank clean out).   Or, notify within 72 hours of an unplanned event (i.e. production upset conditions, spills, acts of nature).   The event must conclude within sixty (60) days (i.e. the waste must be taken off-site).

There are special provisions for VSQGs- a) must maintain a RCRA ID number; b) manifest the waste; c) label episodic waste containers; d) identify a emergency coordinator; and e) maintain records associated with the episodic event.

Adopted-  New Emergency Response Requirements

All generators must document that they have attempted to make arrangements with local emergency responders and keep such documentation in the facility's operating record. New and existing LQG must submit "quick reference guides" with key information regarding waste managed at their site to local responders.  

Adopted- Re-Notification of SQG Status

Under current rules, SQG must only notify EPA or the delegated state one time of their SQG status. The new rule requires re-notification every four years unless the state has more frequent notification requirements.  However, U.S. EPA delayed this provision until 2021 to allow states to update their reporting forms.

Adopted- Flexibility for VSQG to Send Waste to LQG under Common Control

The new rule provide greater flexibility to VSQGs allowing them to send hazardous waste to a LQG which is under control by the same company to consolidate the waste before it is sent to a RCRA TSDF. 

Adopted- New Labeling Requirements

Under the rule, EPA will require all containers, tanks, drip pads and containment buildings to be labeled with information pertaining to the the hazardous of the hazardous waste being accumulated.  This labeling requirement includes to satellite accumulation areas and central accumulation areas.  The enhanced labeling requirements do not require the label to include the identity of the contents in the container.

Prior to sending hazardous waste off-site to a TSDF, containers must be marked with the applicable RCRA waste codes or use a bar-coding system that performs the same function.

Adopted- Webinars and Video Courses Deemed Acceptable Training

The new rule will allow generators to satisfy their personnel training requirements through computer-based and electronic training sessions instead of classroom or on-the job training.

Not Adopted- Record Keeping Requirements for all Non-Hazardous Waste Determinations

Under the current rules, every business that generates a solid waste must evaluate the waste to determine if should be classified and managed as a hazardous waste.  Under current rules,  Large Quantity Generators (LQG) and Small Quantity Generators (SQG) must only keep those records when the determination shows the waste is a hazardous waste.  As part of the Generator Improvements Rule, EPA proposed to expand the record keeping requirement to all records pertaining to evaluation of a waste, even when a waste was determined to be non-hazardous.  EPA argued that it has found that generators fail to make accurate hazardous waste determinations 10% to 30% of the time.

If implemented, this would have amounted to a huge expansion of record keeping requirements. The proposal was strongly opposed by businesses during the public comment period.  EPA decided to drop the requirement in the rule. However, while it elected not to finalize this requirement, EPA noted in the preamble to the rule that maintaining records of any determination a waste was non-hazardous was considered a "best management practice." 

EPA Release New National Enforcement Initiatives for 2017-2019

On February 28, 2016, U.S. EPA publicly announced its priority enforcement areas (EPA National Enforcement Initiatives or NEIs) for the next three years (fiscal years 2017-2019).  The announcement provides keen insight into how EPA plans to allocate its enforcement resources in the coming years.  

 EPA describes the NEIs in the following manner:

"Every three years, EPA selects National Enforcement Initiatives to focus resources on national environmental problems where there is significant non-compliance with laws, and where federal enforcement efforts can make a difference"

EPA has elected to keep five of its current enforcement initiatives, expanding some of its efforts, as well as add two new initiatives.  This brings the total priorities to seven for fiscal years 2017-2019.  The NEIs take effect on October 1, 2016. 

A brief summary of each NEI is provided below.

Air

  • Reducing Air Pollution form the Largest Sources-  EPA's New Source Review (NSR) initiative has targeted cement, glass and acid plants.  However, its principal target has been coal fired power plants.  According to U.S. EPA statistics, from FY 2010 to FY 2015, of the 800 facilities inspected, EPA has increased the number of facilities with enhanced air pollution controls from 41% to 77%.  By maintaining this enforcement priority, EPA will likely focus on compliance with existing decrees as well as target new industries.
  • Cutting Hazardous Air Pollutants - EPA is expanding this initiative for the FY 2017-2019 to focus its efforts on two additional source categories-
    • Large product storage tanks used by refineries,chemical plants and bulk storage facilities- EPA will likely used enhanced inspection techniques, such as infrared cameras to looks for leaks of volatile organic compounds (VOCs) from these storage units;
    • Hazardous waste generator and treatment, storage, and disposal facilities-  the focus of this expanded initiative will be to address hazardous waste tanks, surface impoundments, or containers, as well as related hazardous waste treatment equipment.

Energy Extraction

  • Ensuring Energy Extraction Activities Comply with Environmental Laws

The attached chart shows the dramatic increase in the number of inspections and enforcement actions related to energy extraction.  

EPA has increased the number of inspections from 361 in FY 2011 to between 600 to 700 per year.  Interestingly, the number of enforcement actions has not significantly increased when comparing FY 2011 to subsequent years. 

It is also interesting that EPA maintained this initiative despite the recent dramatic economic downturn in the energy sector.

  

Hazardous Chemicals

  • Reducing Pollution from Mineral Processing Operations- Focus is on releases from mining operations that EPA believes threaten drinking water, surface water as well as cleanup mining sites.
  • Reducing Risks of Accidental Releases at Industrial and Chemical Facilities (NEW)-  The focus of this new initiative will be compliance with Risk Management Plan (RMP) rule.  RMPs are required for facilities that store extremely hazardous materials.  RMP is required under Section 112(r) of the Clean Air Act.  Facilities are required to have plans that inventory the materials and have a plan to implement in the event of releases or emergencies.  Plans are required to be updated every five years. It is likely EPA will look for facilities that have failed to comply with the RMP rule or those facilities with outdated plans.

Water

  • Keeping Raw Sewage and Contaminated Stormwater Out of Our Nation's Water-  EPA has largely addressed municipal wastewater treatment plants (WWTPs) with combined sewer overflows (CSOs) and/or sanitary sewer overflows (SSOs).  This initiative was renewed most likely to focus on compliance with existing consent decrees.  In many cases, cities are facing the most expensive parts of their compliance schedules.
  • Preventing Animal Waste from Contaminating Surface and Ground Water- EPA has been focused on inspections and enforcement of Combined Animal Feeding Operations (CAFOs) for a number of years.  Since 2011 it has conducted over 1,800 inspections and concluded 217 enforcement actions under the Clean Water Act.
  • Keeping Industrial Pollutants Out of the Nation's Waters (NEW)-  EPA will be focusing on certain industries that it believes contribute a larger portion of nutrient and metal pollution. Those industries include chemical and metal manufacturing, mining and food processing.  On its web-page, EPA signals that it will look to compliance with NPDES permits and electronic reporting of effluent violations (eDMRs) to initiate actions.

Hazardous Waste (RCRA) and Retailers

When most people think of businesses that handle hazardous waste, they think of manufacturing and other industrial companies.  The classic image is the storage of 55 gallon drums marked with placards indicating the contents are hazardous. 

In the last two years and unlikely sector has found themselves the focus hazardous waste enforcement and regulatory development- retails stores.  National awareness occurred in 2013 when Walmart announced a settlement with EPA to resolve violations of the Resource Conservation and Recovery Act (RCRA), the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), and the Clean Water Act (CWA) .  The violations were related to the handling of returned, unsold, and off-specification products. Walmart agreed to pay $7.628 million in civil penalties and pled guilty and agreed to pay $81.6 million in three federal criminal cases. Walmart entered into a Consent Agreement and Final Order (CAFO) with EPA, under which Walmart agreed to implement various measures to ensure future compliance. 

While the Walmart settlement was the largest, EPA and State EPA's have been very active in taking enforcement against retailers.  Actions include:

  • Walgreen Co., $16.6 Million (2012)
  • Costco Warehouse, $3.6 Million (2012);
  • CVS Pharmacy, $800,000 (CT, 2013) and $13.75 Million (CA, 2012
    settlement);
  • Target Corp., $22.5 Million (2011);
  • Home Depot, $425,000 (2006) and $10 Million (2007).

When Does RCRA Become an Issue for Retailers?

Products are not regulated as a hazardous waste.  However, if a product is returned by a customer or the store takes the product off the shelf due to damage or for some other reason, the product can become a hazardous waste if it meets certain characteristics.

At issue for retailers are paints, aerosol cans, bleach, polishes, and other chemical products that could be considered reactive, ignitable, corrosive or toxic.  When those products are returned by customers or if they are removed from the store, the retailer must evaluate whether the product has become a hazardous waste and should be managed as such.  

Waste can be generated at the retail store level through customer returns, household hazardous waste events, product recalls, damaged product containers or packaging, off specification product, unauthorized dumping, customer spills, and change out of inventory by the store. 

Large retailers also use reverse logistics systems to consolidate products that may be returned or removed from retail stores.   These products are sent to consolidation centers where decisions can be made regarding whether the product can still be sold, returned to the vendor, donated, recycled or discarded.  

Is a removed/returned product a "waste" when it leaves the retail store or when the decision is made it is to be discarded at the consolidation center?  That is one of many critical open issues facing retailers.

If a product is a hazardous waste, then it must be stored, managed, transported and disposed properly.  In addition, RCRA's "cradle to grave" regulatory scheme requires maintenance of required paperwork to verify any hazardous waste was managed properly.

EPA Collects Information Regarding Hazardous Waste Requirements for Retailers

On February 14, 2014, EPA released a Notice of Data Availability (NODA) in order to "collect information towards improving hazardous waste requirements for the retail sector."  In the NODA EPA sums up the challenge facing retailers- "Retailers are required to make numerous hazardous waste determinations at thousands of sites, generally by store employees with limited experience with the RCRA hazardous waste regulations."

Some national retailers (Walmart and Home Depot) already submitted comments to EPA.  Some of the issues/concerns raised by these retailers include:

  1.  Waste characterization at the retail store level by employees with little training or understanding of the regulations;
  2. Generation of waste at the store level that can force stores to fluctuate between Conditionally Exempts Small Quantity Generator to Large Quantity Generator status under RCRA (different regulations apply depending on the store's classification);
  3. The lack of applicability of the Household Hazardous Waste Exemption which allows customers to dispose of the same products in the trash as EPA requires retailers to manage as a hazardous waste;
  4. Argue for the application of Universal Waste classification which would make it much easier for retailers to manage products; and
  5. Application of RCRA regulations to central processing centers utilized by retailers;
  6. Regulation of empty prescription bottles;
  7. Ambiguous regulations of electronic waste.

Retailers identify legitimate issues with application of RCRA to their stores.  In reality, RCRA was designed to regulate generate hazardous waste from industrial operations, not consumer stores.  

How EPA decides to move forward to develop sensible regulations will be very interesting to watch. However, in the meantime, retail stores must be aware there is not "timeout" while EPA figures this out.  No better evidences exists than the multi-million dollar enforcement cases against large retailers.

(Photo: courtesy Flickr Catawba County)

The Threat of Personal Liability for Environmental Violations of Small Businesses

Owners of small business form corporations, in part, to insulate themselves from personal liability. A recent trend in Ohio is that the State has become far more aggressive in pursuing owners of small businesses personally in environmental enforcement actions.

A business owner could still be pursued even if the corporate formalities were followed.  More and more the State is pursuing any president or owner of a small business who has an active role in managing his company day-to-day.

Due to the high costs associated with environmental compliance, this is a trend that owners of small businesses should be aware of and take prudent steps to try and protect themselves. 

"Piercing the Corporate Veil"

A fundamental rule of corporate law is that, normally, shareholders, officers, and directors are not liable for the debts of the corporation. There are exceptions to this rule  Courts have found that the “veil” of the corporation can be “pierced” and individual shareholders held liable for corporate misdeeds when it would be unjust to allow the shareholders to hide behind the fiction of the corporate entity.  This is commonly referred to as "piercing the corporate veil."

The test in Ohio for disregarding the corporate form is whether:

  1. Control over the corporation by those to be held liable was so complete that the corporation has no separate mind, will or existence of its own;
  2. Control over the corporation by those to be held liable was exercised in such a manner as to commit fraud or an illegal act against the person seeking to disregard the corporate entity; and 
  3. Injury or unjust loss resulted to the plaintiff from such control and wrong.

[See, Belvedere Condominium Unit Owners' Assn. v. R.E. Roark Cos. (1993), 67 Ohio St.3d 274, 287, 617 N.E.2d 1075]

It had been a rare instance when the AGO would try to "pierce the corporate veil" and pursue shareholders, owners or officers of a corporate personally for environmental violations.  That has changed since the State won a victory in 2006 in case of State of Ohio v. Mercomp.  In that case, the State successfully pierced the corporate veil attaching personal liability to Manny Rock, a shareholder of a landfill.

What Actions Gave Rise to Liability?

 Here are some of the facts that the Court gave rise to personal liability:

  • Mr. Rock was the sole shareholder of the corporation;
  • The name of the corporation was based upon his initials;
  • Regulatory violations by a corporation, absent affirmative wrongful conduct by the shareholder, is sufficient; and
  • The failure of the Corporation to correct the environmental violations threatened public health and the environment.

It is important to note that the Court found liability even though it did not find under-capitalization, failure to observe corporate formalities, insolvency, or diversion of corporate funds for personal use.

Since 2006 State Seeks Individual Liability Frequently

Since the Mercomp decision in 2006, the State of Ohio has frequently sought (and obtained) personal liability of owners of small businesses.  Individuals are not only required to perform clean up, they are also subject to civil penalties if they don't perform on a timely basis. 

For small businesses that have a sole or large majority shareholder, the Mercomp case increases the liability risks for individuals.  If a company has environmental violations that have gone unaddressed, the State may argue for personal liability.

Owners of small businesses must be aware of these risks and take steps to try and protect themselves. .

Missing Hazardous Waste Paper Work Can Be Costly

Federal hazardous waste regulations (RCRA) have long been referred to as management from "cradle to grave."  In order meet this management principle, the regulations require detailed paper work and reporting from both small and large businesses. 

Failure to maintain the proper paper work can result in significant penalties or even change your regulatory status which will have even greater implications.  Just in 2008, Ohio EPA Division of Hazardous Waste Management (DHWM) has taken 24 formal enforcement actions that included assessment of civil penalties.  Those penalties have ranged from $4,000 to $75,000.  Many of the actions were against small to medium sized businesses.

In addition, hazardous waste enforcement cases will often be reported in the newspaper, even in the small town local newspaper.  If you want to avoid the bad publicity and a costly fine, it pays to review your company's paper work practices. 

A recent EHS blog post provided a good example of the dangers of missing paperwork. 

But in the absence of any documentation that showed the facility never generated more than 2200 lbs of waste in a calendar month, the inspector assumed incorrectly that the facility generated all the wastes that were shipped out in August of 2001 in that month. [shipped out more than 2200 lbs in the month] The reality was that the wastes in the two shipments made in August had been accumulated over the past several months.

The fact the company did not maintain good records resulted in the inspector citing them for being a Large Quantity Generator (LQG) even though in reality the company was a Small Quantity Generator (SQG).  Without the proper records, the inspector's conclusion becomes difficult to refute.

Ohio EPA has identified the most frequently cited RCRA violations in Ohio.  Reviewing the following list of frequent  categories of violations is a good place to start in determining if your company is property managing hazardous waste. 

  • Waste Determination- The regulations require all waste to be evaluated.  This is often an area overlooked by businesses. Failing to evaluate just one barrel of waste can result in a citation. Ohio EPA developed a handy fact sheet that is worth reviewing to get yourself familiar with these requirements.
  • Annual Reports-  All LQG must submit a report by March 1st for the preceding year.  Review your files to makes sure you have submitted annual reports. 
  • Container Management- Must inspect your hazardous waste storage areas at least once a week and maintain a log documenting those inspections.  Ohio EPA has provided a hazardous waste storage inspection log sheet that can be used to maintain your records.
  • Emergency Equipment Inspections- SQG and LQG must maintain a log of inspections showing all emergency equipment (fire suppression, spill containment, alarms) were inspected as recommended by the manufacturer or supplier of the equipment.  Ohio EPA also has a emergency equipment inspection log sheet you can use to maintain these required records.
  • Used Oil Storage-  All containers use to store used oil must be properly labeled with a sign that says "used oil."  Using terms like "hazardous waste" or "waste oil" is not sufficient.
  • Large Quantity Tank Systems-  All LQG's that use tanks to store hazardous waste must inspect the tank once "each operating day."  A log of inspections must be maintained. According to an Ohio EPA fact sheet, this means each day the tank is in use.  Even if workers are not on-site seven days a week.

(photo from flickr: Ashe-Villian)