WHAT TO DO WHEN YOU HAVE AN “ALLEGED” VIOLATION Keith W. Turner Watkins & Eager

 1. No alleged noncompliance  2. Alleged noncompliance – that can be addressed without further enforcement  3. Alleged violations – maybe requested to attend an administrative meeting Inspection Results

 FACTS – In order to properly advise and provide guidance, all the facts must known  Good, Bad and the Ugly Responding to MDEQ

 Upon receipt of MDEQ letter, develop written responses for each non-compliance/alleged violation(s)  Involve facility staff, consultants, and attorney  1. Violation or not - why  2. Actions to correct  3. Actions to prevent future occurrences  Response letter language is critical  In this enforcement action and potential future actions Responding to MDEQ Letter

 MDEQ considers response – depending upon significance of violation, consider requesting a meeting with MDEQ  Prepare clear and concise supporting documents for meeting  Meet with MDEQ – present position – Company management must attend  Await MDEQ decision Next Step

 MS Code Ann. Section (7)  Willfulness  Damage to the environment  Cost of restoration/abatement  Economic benefit  Seriousness  Past performance history  Voluntary disclosure Determining Penalty Amounts

 Willfulness  Can be inferred from lack of corrective action on a prior known violation  Damage to the environment  “no evidence of actual harm to the environment... need be established by the MDEQ” in order to impose a civil penalty. Barrett Refining Corp. v. Miss. Comm'n on Envtl. Quality, 751 So.2d 1104, 1128(100) (Miss.Ct.App.1999) (citing Chevron v. Yost, 919 F.2d 27, 29 (5th Cir.1990)). Gray v. MCEQ (2015) Chevron v. Yost, 919 F.2d 27, 29 (5th Cir.1990) Determining Penalty Amounts

 Cost of restoration/abatement  Economic benefit (of noncompliance)  BEN - Calculates a violator's economic benefit of noncompliance from delaying or avoiding pollution control expenditures  ABEL - Evaluates a corporation's or partnership's ability to afford compliance costs, cleanup costs or civil penalties  Probability of success Determining Penalty Amounts

 Seriousness  Past performance history  Same violations  Other types of violations  Voluntary disclosure  Prompt disclosure after knowledge  Begin corrective actions with due diligence  Not otherwise required to make disclosure  Noncompliance did not threaten health and environment  Penalty reduced to De Minimis amount (excluding economic benefit) Determining Penalty Amounts

 MDEQ Policy  EPA March 2015 Update to SEP Policy  Factors to consider –  All projects must have sufficient nexus  Only a percentage of the total penalty (depending on violations, size of business etc) Supplemental Environmental Projects

 Consider what federal statutes are implicated  Review applicable EPA penalty policies  Is DOJ involved ?  What other federal agencies are involved ?  (Coast Guard, FWS, OSHA) EPA Approach To Penalties

 Use of standard MDEQ language  Recommended revisions/edits  Clarify facts  Clarify non-admission  Clarify alleged violations MDEQ Agreed Orders

Example Standard Language

 When the alleged violator does not cooperate with the MDEQ or the parties can not agree on terms of an Agreed Order  Order is appealable to CEQ and then to Court MDEQ Ex Parte Administrative Order

Should You Challenge the Penalty?

 Compare MDEQ understanding of the facts  Compare actual language of the statute/regulations to the facts  Similar enforcement actions (lack of easily accessible precedent)  Consider all legal approaches !  Out of the box But – don’t assume the proposed penalty is acceptable

 1. Negotiate with MDEQ Staff  2. Proceed before the MCEQ  3. Appeal to the Chancery Court  4. Appeal to the MS Supreme Court The Challenge Process

 Must have –  Solid supporting facts  Supporting law  Sufficient funding (don’t plan on going part of the way)  Even with all the elements – probability of success Challenging beyond the CEQ

 MDEQ does not as routine, provide a “completion” or “closure” letter once terms of the Agreed Order are satisfied  But you can asked for one - and should, it may come in use later Completion of Agreed Order

 Office of Community Engagement (OCE) through the Small Business Environmental Assistance Program assists small businesses and municipalities with environmental regulations – from permitting to compliance assistance. MDEQ Small Business Technical Assistance Program

 Self Audit Privilege - MS Code Ann. Section  Not admissible in any legal or investigative action unless-  1. facility was or is in noncompliance and  2. did not take “appropriate” corrective action  Consider conducting self-audits using consulting engineer and attorney – gain attorney-client privilege along with statutory protection Prevention

Questions ? Keith Turner Watkins & Eager