Environmental Compliance

By James L. CurtisKay R. Bonza, and Craig B. Simonsen

Seyfarth Synopsis:  A railcar cleaning company and its executive officers were recently charged in a 22-count indictment with conspiracy, violating worker safety standards resulting in worker deaths, violating the Resource Conservation and Recovery Act (RCRA), and for submitting false documents to a federal agency.

Nebraska Railcar Cleaning Services LLC (NRCS) employees sent workers in to railcars to scrape and remove various commodities from tanker cars, including gasoline, ethanol, petroleum by-products, pesticides, herbicides, and food grade products.  Two of the company’s workers were killed and a third was injured when the contents of a railcar ignited while being cleaned.  According to the indictment, the company, NRCS and its owners and executives, allegedly failed to implement worker safety standards and then tried to cover that up during an Occupational Safety and Health Administration (OSHA) inspection.  The defendants also allegedly mishandled hazardous wastes removed from rail tanker cars during the cleaning process.

OSHA requires employers to test air in confined spaces such as rail tanker cars for hazardous gases prior to allowing employees to enter the confined workspace, and to provide employees exposed to certain chemicals with respirators for which they must be assessed and fit tested.  EPA requires facilities like NRCS to ensure that hazardous wastes generated are properly treated and disposed of.

The indictment alleges that after a 2013 inspection of NRCS, the company represented that NRCS had been testing for hazardous wastes, including benzene, since July 2014.  After OSHA returned to NRCS in March 2015 to conduct a follow-up inspection and was turned away, documents were “created” and submitted to OSHA to “falsely show” that NRCS had been purchasing equipment to test the contents of railcars for benzene and had taken other required safety precautions.  In addition, “during inspections by the Nebraska Department of Environmental Quality and the U.S. Environmental Protection Agency in 2013 and 2014 respectively, NRCS was informed that it was required to test its wastes to determine if they were hazardous in order to properly dispose of them, rather than send all untested waste to a landfill not permitted to receive hazardous waste.”  The indictment alleges that was not done before April 2015.

In April 2015, the contents of a railcar ignited while being cleaned by NRCS employees. Two employees were killed and a third was injured. Two days after the explosion, NRCS had three railcars tested to assess whether their contents were hazardous, and two were determined to be hazardous.

Employer Takeaways

This indictment presents a good example of what not to do when dealing with OSHA and environmental agency inspectors.  First, if the employer represents that it is implementing certain safety measures — do it!  Secondly, the case serves as a reminder of the importance of providing complete and accurate submittals to government entities.  A deliberate falsification can have serious ramifications, both by way of civil penalties and criminal prosecution.  As everyone has learned through countless infamous cases, it’s not the crime but the cover-up that will really come back to bite the employer.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Workplace Safety and Health (OSHA/MSHA) Team.

By Wan Li, Andrew S. Boutros, Kay R. Bonza, and Craig B. Simonsen

Seyfarth Synopsis: The Chinese Ministry of Environmental Protection has just announced criminal, civil, and administrative enforcement statistics, and put companies on notice that those who violate environmental laws and rules may face blacklisting, including restrictions to their future business endeavors.

We have previously written about the need for multinational companies operating in China to comply with Chinese environmental and workplace safety laws and regulations. See for instance Multinationals in China Should be Aware of Increased Enforcement of Environmental Law, Monitoring Requirements – and Fraud, and International Employers Watch Out: China Will Assign Hefty Fines for Worker Safety Violations.

Now more recently, in the last thirty days, the Ministry of Environmental Protection (MEP) in the People’s Republic of China (PRC) has been publishing notices and warnings to “polluters” and industries about their potentially non-compliant business activities.

For example, the MEP’s just-released news announcement summarizing enforcement actions makes clear just how serious China is taking compliance failures of environmental laws and rules. Specifically, the August 1, 2016, notice, Supreme People’s Court Releasing White Paper on China’s Environmental Resource Trial, provides a progress report “since the establishment of Environmental Resource Courts.” In this regard, the notice provides the following eye-popping statistics about China’s enforcement activities from January 2014 to June 2016 by its courts nationwide:

  • A total of 37,216 criminal cases of first instance trial involving air, water and soil pollution that brought 47,087 people to justice;
  • A total of 195,141 civil cases of first instance trial involving resource ownership, environmental infringement and contract disputes; and
  • The conclusion of 57,738 administrative cases of first instance trial involving the environment and its resources.

Only a few days earlier, on July 28, 2016, the MEP, together with 30 other government agencies, issued another announcement warning companies that those who seriously violate environmental laws and rules will face restrictions to their future business endeavors. Specifically, companies may be barred from entering certain businesses, blocked from applying for business permits, or disqualified from loans. In the words of the MEP, “[t]hey will not qualify for preferential policies.” The MEP also highlights 14 serious violations, including operating or engaging in construction work without environmental assessments or permits, and illegally discharging pollutants.

The MEP notes that it will manage a blacklist of companies with “bad environment records” and will share it with other government agencies.

In fact, in what can be viewed as a prospective “industry sweep,” on July 28, 2016, the MEP announced a “national-scale environmental inspection” in the iron and steel industry. The notice states that local areas will be required to strengthen enforcement activities and inspections in this industry, as well as “make effort to reveal, solve, and expose a batch of prominent environmental violations in this industry.”

According to Tian Weiyong, Director General of the Ministry’s Bureau of Environmental Supervision and Inspection, under this program, local areas are required to organize inspectors and inspections involving the “main firms in the iron and steel industry” within their administrative regions. The inspections will also assess how well the iron and steel makers have “attained emission standards and installed and run the automatic monitoring equipment.”  The inspections are slated to occur between June and October 2016.

Multinational businesses and industries that have interests and facilities in China–especially now in the iron and steel industries– may wish to examine the extent of any potential liability in their holdings, in particular since companies with “bad environment records” may be subject to business-disrupting (if not ending) blacklisting.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the International Employment Law Team, the Environmental Compliance, Enforcement & Permitting Team, or the White Collar, Internal Investigations, and False Claims Team.