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The
practicing lawyer in Arkansas through his experience
gains some general knowledge about almost all areas
of the practice of law and with time develops an expertise
in certain areas of law to serve a specific need for
his clients. The practice of environmental law has
its own characteristics and requires not only an understanding
of environmental laws and regulations but also an
understanding of a unique administrative law system
and its procedures. Arkansas attorneys unfamiliar
with environmental practice may not be aware that
the Administrative Procedures Act does not apply to
administrative procedures before the Arkansas Pollution
Control and Ecology Commission or that this commission
and the Arkansas Department of Environmental Quality
are separate regulatory bodies with separate functions
and roles in the regulation of environmental law.
Clients today are confronted
daily with environmental questions and may not understand
the consequences of their actions. Understanding the
administrative process is imperative to providing
effective representation that saves your clients money
and resolves their legal problem in a timely manner.
This article describes four scenarios with the environmental
issues facing fictional clients Tom and Jane.
Scenario 1 The Inspection.
Your client Tom owns
an industrial manufacturing business. This morning
he calls in a rather agitated mood to tell you an
inspector from the Arkansas Department of Environmental
Quality is at the gate requesting access to his facility
and the records for emissions from the plant. He is
upset that time will be diverted from his daily schedule
and that other employees will have to deal with this
inspection. Tom wants to tell the inspector, among
other things, that this is not a good time and to
come back later or not at all. He has his permits
from ADEQ, but has never met with ADEQ before this
morning and he cannot understand why ADEQ is bothering
him. He wants you to tell him what he should do before
he lets anybody into his facility.
This is not the moment
for Tom to get adversarial. Your best advice (in your
sudden new role as his environmental attorney) is
that cooperation goes a long way in dealing with state
regulators and resistance to a routine inspection
is a mistake. This inspection occurs for one of two
reasons: (1) it is a routine inspection to determine
if the facility is meeting the terms and conditions
of its permit, or (2) a complaint has been filed with
ADEQ, possibly anonymously, claiming that the facility
is creating an environmental problem and may be in
violation of the law. Resistance by Tom to an inspector
may turn a routine inspection into a matter that draws
the full attention of ADEQ's enforcement and legal
staff.
ADEQ has the statutory
authority to obtain an administrative search warrant
to enter private or public property for the purpose
of obtaining information or conducting investigations
or inspections.1 Cooperation may minimize a local
judge's involvement with the execution of an administrative
search warrant. Otherwise, suddenly the routine inspection
is now a local news item, with the inference that
Tom's facility has something to hide. Tom can lessen
the impact of an inspection by his involvement in
the inspection process. Tom should accompany the inspector
throughout the inspection, answering questions and
explaining what the company does, how his systems
operate to produce a finished product, and how the
wastes and emissions from that process are handled.
Advise Tom that, if the inspector takes ground, water,
or emission samples, a "split" sample must
be made available to the facility, which can test
its sample to corroborate or dispute the results of
ADEQ's analysis.2 The results may confirm the existence
of an environmental problem or point out a discrepancy
in the test results. At the conclusion of the inspection,
the inspector may ask Tom to review and sign his inspection
form or may inform Tom that he will return to his
office to complete the form before sending Tom a summary
of his findings in the inspection.
If the inspection report
cites a violation, ADEQ may notify the facility by
letter identifying the compliance issue and instruct
the company to remediate the problem. If the violation
is serious or considered a significant violation,
ADEQ may send Tom a Consent Administrative Order.
This enforcement document will set forth the facts
and circumstances leading to the discovery of the
alleged violation and the remediation plan agreed
to by the parties, and it may require the facility
to pay an administrative civil penalty. Tom should
provide to you a copy of the inspection report and
the draft Consent Administrative Order. If it appears
ADEQ has discovered an environmental problem which
may result in an enforcement action, a meeting with
Tom and ADEQ staff should be scheduled to discuss
the terms and conditions of the Consent Administrative
Order. This meeting provides an opportunity to negotiate
the terms of the Consent Administrative Order, including
the assessment of an administrative civil penalty.
It is the policy of ADEQ, where circumstances warrant,
to seek compliance through cooperative efforts and
resolve violations through "informal" procedures
prior to commencing formal enforcement actions.3 This
order will be executed by both the facility and the
ADEQ Director, and public notice of the Consent Administrative
Order is published in a newspaper of statewide circulation
to provide the general public the opportunity to comment
on the agreed order.4
Tom may also wish to
take advantage of ADEQ's Supplemental Environmental
Project policy to mitigate the administrative civil
penalty. A Supplemental Environmental Project is an
in-kind service or cash contribution to a project
designed to advance environmental interests, which
a person agrees to perform in partial settlement of
an enforcement action but which the person is not
otherwise legally required to perform. The participant
retains no monetary benefit.5 The Director of ADEQ
has the statutory authority to authorize in-kind services
or cash contributions as partial mitigation of cash
penalties for use in projects or programs designed
to advance environmental interests.6 Your client will
submit a proposal to ADEQ for review and approval
outlining the project and describing how the service
is to be provided. The project must be approved by
ADEQ. It cannot duplicate or augment services already
performed by ADEQ or perform a function already required
of the client under the terms of a permit.7 Generally,
ADEQ may approve a supplemental environmental project
to mitigate up to 35 percent of the assessed civil
penalty.
If Tom fails to respond
to ADEQ, he may be issued a Notice of Violation, a
unilateral enforcement action that recites the alleged
violations and assesses an administrative civil penalty.8
The recipient of a Notice of Violation has 20 days
to respond and request an administrative hearing from
the Arkansas Pollution Control and Ecology Commission.9
This request begins the litigation process before
the Commission's Administrative Hearing Officer,10
who will hold a hearing under the procedures set forth
in the Arkansas Pollution Control and Ecology Regulation
No. 8,11 taking testimony and evidence from both ADEQ
and the recipient before issuing a Recommended Decision
to the Commission.12 This decision is submitted to
the Commission for review at a regularly scheduled
meeting. The Commission will preside over a de novo
review of the record13 and the parties may request
oral argument before the Commission. The Commission
will vote to affirm or reverse the Administrative
Hearing Officer's Recommended Decision which shall
constitute a final Commission action for purposes
of appeal.14 This decision of the Commission is appealable
to the Circuit Court of the county where the facility
is located.15 The Circuit Court's review is on the
record and the court's decision is appealable to the
Arkansas Supreme Court.
The litigation phase
can be avoided in most cases by proactive cooperative
interaction with ADEQ. Resolution of enforcement issues
by informal procedures generally produces more favorable
results for your client.
Scenario
2 The Permit.
Your client, Jane of
Jane's Greenstuff, Inc., invites you to the opening
of her new manufacturing facility. As you tour her
new building, you notice emission pipes exiting through
the ceiling and a discharge pipe from the building
to the adjacent trees. You walk to the end of the
pipeline and discover it ends in the middle of a creek,
with a green colored liquid discharging from the pipe.
You ask Jane about her environmental discharge permits
and receive the response, "What permits?"
What Jane didn't know is that she may be in violation
of the Arkansas Water and Air Pollution Control Act
for discharging into "waters of the state,"16
and can be assessed a civil penalty of up to $10,000
per day per violation.17 As her attorney, advise Jane
that she needs to contact ADEQ to initiate the permit
process (as to the violations - see Scenario 1). ADEQ
will provide an application form for the type of permit
required, and it may be necessary for Jane to retain
the services of an environmental consultant to assist
in the preparation of the technical or scientific
information required by ADEQ with regard to proposed
emissions or discharge levels established in the permit.
Jane is also required
to file a Disclosure Statement18 with ADEQ, providing
the names of all affiliated persons or legal entities
holding at least a five percent debt or equity interest
in Greenstuff, Inc. Jane must also disclose any history
of environmental non-compliance with any environmental
laws or regulations for the past 10 years.19 As her
attorney, you should review the Disclosure Statement
for accuracy, since a permit can be revoked, modified,
or suspended for failure to disclose all relevant
facts.20 Any history of environmental non-compliance
should be brought to the attention of ADEQ with a
full explanation of mitigating circumstances, since
a designation of an applicant by ADEQ as a "bad
actor" can adversely impact all future permits
in Arkansas.
A public notice of the
permit application is published by Jane in a newspaper
of general circulation in the county where the facility
is located,21 and any interested person may request
within 10 days a public hearing on the application.22
Once the application has been reviewed and deemed
by ADEQ to be "administratively complete"
with all required information properly submitted,
upon completion of any public hearings, the Director
may propose the issuance (or denial) of a draft permitting
decision. Public notice of this draft permit decision
is also published in a newspaper of general circulation
in the county where the facility is located.23 The
publication of this notice initiates a 30-day public
comment period for ADEQ to accept comments from the
public in writing on the draft permitting decision
or orally at the public hearing.24 After conclusion
of the public comment period, the Director will announce
his final permitting decision and include a response
to each issue raised by the public comments.25 Other
than the applicant, only those interested parties
who have submitted comments on the record in writing
or orally at the public hearing have standing to appeal
the permit decision to the Arkansas Pollution Control
and Ecology Commission. The appeal must be filed with
the Commission secretary within 30 days of issuance
of the final permit decision by the Director.26
It is important that
Jane understand the permitting process, her rights,
the rights of the general public, and what is expected
of her by ADEQ to be issued a permit. It is equally
important for her to understand the time involved
in the permit process and the possible delays and
costs involved if the permit is controversial or has
public opposition. Permit appeals are also litigated
matters before the Administrative Hearing Officer,
with de novo review and oral arguments before the
Commission and possible appeals to Circuit Court and
the Arkansas Supreme Court.27
Scenario 3 The Abandoned Property.
Client
Jane calls to tell you her business is booming and
she needs room to expand. She would like to build
her own facility, but there are no available parcels
with a location that fits her needs. Jane mentions
how great it would be to obtain the old defunct battery
factory site. This site has long been unused, and
local banks have resisted financing an environmental
risk. The abandoned site was once used to manufacture
automobile batteries before environmental regulation,
and concerns now exist that the site is contaminated.
The site is convenient to the interstate highway,
but Jane is concerned about acquiring real property
with costly environmental problems. She certainly
doesn't want to be held responsible for an environmental
problem she did not cause. Since you have successfully
advised Jane on her previous environmental issues,
she now wants your advice on what to do.
As her new environmental
lawyer, you inform her about the Arkansas Voluntary
Clean-up Act, which promotes the redevelopment of
abandoned industrial, commercial, or agricultural
sites. This program, known as Brownfields Redevelopment,28
may be the solution for Jane. As a prospective purchaser
of an abandoned site, Jane will not be held responsible
for any preexisting pollution or contamination at
the site acquired through the Brownfields Redevelopment
program.29 For Jane to acquire a property under the
program, a comprehensive site assessment will be performed
to establish a baseline of contamination.30 ADEQ will
review and approve the assessment, and Jane and ADEQ
will enter into an Implementing Agreement to set forth
the agreed clean-up liabilities and obligations at
the site, as determined by the baseline level of contamination.
The Implementing Agreement will also describe the
nature of the activity that Jane proposes for the
property.31 Public notice is also provided the general
public of the proposed use of the property, the proposed
clean up decisions or remedial action, and to provide
an opportunity to comment and request a public hearing
prior to the selection of a final remedy for the site
by ADEQ.32
Once Jane has acquired
title to the property, a plan for remedial action
approved by ADEQ will be implemented and attached
as an amendment to the Implementing Agreement.33 This
remedial action may be limited in scope where contaminants
do not pose an unacceptable risk based on the intended
use of the site, which will be protective of public
health and the environment.34 If it is necessary for
Jane to acquire the property before the site assessment
is completed, she may submit to ADEQ a Letter of Intent
to Participate and still retain her eligibility for
participation in the voluntary cleanup program.35
A restriction shall be placed on the deed to Jane's
new property restricting the use to activities and
compatible uses that protect the integrity of any
remedial action implemented on the property.36 A notice
of the Implementing Agreement will be filed with the
circuit clerk as part of the property's chain of title.37
The Brownfields Redevelopment
program in Arkansas provides prospective purchasers
the opportunity to obtain abandoned property, remediate
the environmental problems to an acceptable level
that is protective of human health and the environment,
and reuse or redevelop the property without incurring
the responsibility for remediating preexisting contamination
beyond that identified in the comprehensive site assessment.
Scenario 4 The Tank.
While you were on the
telephone advising Jane on the acquisition of the
abandoned industrial tract under the Brownfields Redevelopment
program, Tom called back. His facility includes two
underground storage tanks for dispensing diesel fuel
for his trucks. This morning diesel fuel was observed
around the fuel island, and inventory control records
showed a discrepancy in the volume of fuel in the
tanks and pumped to the trucks. Tom concluded the
loss of diesel fuel is the result of a leak in the
underground storage tanks or the underground piping
system. Tom has called an environmental remediation
firm to make repairs or excavate the tanks and remediate
the contaminated site. Tom wants to know from you
if there is anything else he should be doing, since
he has never had a problem like this before. He needs
your help to make the correct decisions to comply
with environmental laws and regulations. Since you
successfully guided Tom through his inspection, you
are now his environmental attorney.
Accidental releases
from underground storage tanks are not uncommon. However,
compliance with the laws and regulations governing
regulated storage tanks can be confusing, and a misstep
could cost your client significant dollars. When Tom
discovered the suspected release from the underground
storage tank, as the owner or operator of the tank,
he was required to notify ADEQ and undertake to collect
and remove the release and restore the area.38 Failure
to do so can result in his liability to ADEQ for the
cost of corrective action or can result in an enforcement
action due to a release of a regulated substance from
a storage tank.39 ADEQ has the authority to assess
an administrative civil penalty not to exceed $10,000
per day for each tank.40 Tom has wisely proceeded
to begin remediation of the release immediately, but
is unaware that his actions may affect his trust fund
eligibility and cause him significant financial consequences.
The Petroleum Storage
Tank Trust Fund provides reimbursement for taking
corrective action or to compensate owners and operators
for claims by third parties for injury and property
damage caused by accidental releases from qualified
storage tanks. To be eligible for reimbursement from
the Petroleum Storage Tank Trust Fund, Tom must ensure
that each of his petroleum storage tanks is registered
with ADEQ, the annual storage tank fees are paid in
full, he maintains evidence of financial responsibility
in the amount of $7,500, and has completed and mailed
the annual self-inspection audit form to ADEQ.41 Additionally,
to insure coverage under the trust fund for corrective
action of an accidental release, Tom must also give
ADEQ "timely" notice of the release, defined
as within 24 hours of discovery of the release.42
It is important that Tom call ADEQ immediately to
report the release followed by a written notice within
three business days of the telephone call.43 Reimbursement
will not commence until he has spent $7,500 on corrective
action.44 Once proof of payment of this "deductible"
has been provided to ADEQ, and he has met all other
eligibility requirements, Tom may begin to submit
an application for reimbursement for corrective action
costs to the Advisory Committee on Petroleum Storage
Tanks, which advises and makes recommendations to
the Director of ADEQ regarding claims for payment.
As his attorney, your
knowledge of the requirements of the Petroleum Storage
Tank Trust Fund statute and regulations will assist
Tom in his eligibility and in the reimbursement for
funds spent for corrective action. Failure to meet
the trust fund eligibility requirements can mean the
denial of trust fund reimbursement for thousands of
dollars in tank removal and remediation costs.
Conclusion.
These scenarios are
common examples of the types of environmental issues
facing business clients every day. Understanding the
procedures developed by statute and regulation is
fundamental to providing effective representation
that protects your clients' interests and saves them
money.
ENDNOTES
1. Ark. Code Ann. § 8-1-107(a)
2. Id. § 8-1-107(d)(4)
3. Ark. Pollution Control and Ecology Commission Regulation
No. 8, § 2.3.1(a).
4. Id. § 2.3.6.
5. Arkansas Department of Environmental Quality SEP
Policy and Proposal Guidelines.
6. Ark. Code Ann. § 8-4-103(f)(3)(A)
7. Id. § 8-4-103(f)(3)(c)
8. Arkansas Pollution Control and Ecology Commission
Regulation No. 8, § 2.3.2.
9. Id. § 2.3.2(b)(5).
10. Id. § 2.5.8.
11. Id. § 2.5.11.
12. Id. § 2.5.16.
13. Id. § 2.5.18(a).
14. Id. § 2.5.18(d).
15. Ark. Code Ann. § 8-4-223(a)(1).
16. Id. § 8-4-217(a)(1).
17. Id. § 8-4-103(b)(4).
18. Id. § 8-1-106(b)(1).
19. Id. § 8-1-106(a)(2)(D).
20. Id. § 8-4-204(2).
21. Id. § 8-4-203(b)(1) and (d)(1).
22. Id. § 8-4-203(b)(2).
23. Id. § 8-4-203(c)(1)(A)(i).
24. Id. § 8-4-203(c)(1)(B).
25. Id. § 8-4-203(c)(2)(A)(i).
26. Id. § 8-4-205(b)(1) and Regulation No. 8,
§ 2.5.5 (a).
27. Arkansas Pollution Control and Ecology Commission
Regulation No. 8, § 2.5.18.
28. Arkansas Pollution Control and Ecology Commission
Regulation No. 29.29. Ark.
Code Ann. § 8-7-1102(a)(5).
30. Id. § 8-7-1104(b).
31. Id. § 8-7-1104(d)(5).
32. Arkansas Pollution Control and Ecology Commission
Regulation No. 29, § 29.501.
33. Ark. Code Ann. § 8-7-1104(j)(1).
34. Id. § 8-7-1104(j)(3)(A).
35. Arkansas Pollution Control and Ecology Commission
Regulation No. 29, § 29.604.
36. Ark. Code Ann. § 8-7-1104(n).
37. Id. § 8-7-1104(q)(3).
38. Id. § 8-7-807(a)(1).
39. Id. § 8-7-807(b).
40. Id. § 8-7-806(c) and (d)(3).
41. Arkansas Pollution Control and Ecology Commission
Regulation No. 12, §12.302.
42. Id. § 12.305(a).
43. Id. § 12.305(c)(1).
44. Ark. Code Ann. § 8-7-907(a).
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