The Importance of Environmental Compliance

Direct and indirect financial costs for violations of environmental, health and safety (EH&S) requirements can hinder current and future operations.

Rich Thompson, guest author for Mapistry, has over 30 years of compliance experience in corporate environmental engineering and compliance positions with Waste Management and Republic Services. 

I had an opportunity to speak about this issue while presenting at the 2018 Pollution Prevention Summit. My presentation, titled “The Impact of Noncompliance on Companies” focused on how noncompliance with environmental laws and regulations can impact your company.  Direct and indirect financial costs for violations of environmental, health and safety (EH&S) requirements can hinder current and future operations.

My presentation focused on the direct costs for penalties from regulatory bodies including the U.S. EPA, OSHA, and a multitude of state and local agencies.  The EPA is not shy about highlighting their actions detailing annual civil and criminal enforcement results and costs for remediation or restitution for damages.  If you’ve ever been involved in one of these events, you know how distracting and disruptive this becomes to operating your business.

Here’s the other point you should know; the fines and penalties for environmental enforcement are going up.

Every category of penalty from the Clean Air Act and the Clean Water Act to the Resource Conservation and Recovery Act (RCRA) have experienced an increase in the maximum $ per day, per violation.  Fines for health and safety matters under OSHA for willful and repeated violation have increased to $124,708 per violation.

Indirect financial costs including legal fees can meet or exceed the penalties in some cases. Damages requiring environmental remediation can increase insurance costs. Stormwater Clean Water Act violations have erupted in California.  From 2015 to now, stormwater litigation has increased by 260%. The Mapistry team forecasted that 22% of California facilities will be sued by 2020.

Impacts to your company’s brand and reputation can have long term effects.  Current and potential future employees will view the company’s culture as less valuable as a result of these events.

Your customers, investors, employees, and the communities you operate in demand compliance as a starting point for their business.  The ability of your Company to grow by expansion of existing facilities and the permitting of new ones is directly linked to your overall environmental compliance performance.  Your compliance record must show continuous improvement, in many cases measured by the total number of enforcement actions received.

Although I provided some suggestions on how your company should administer a compliance focused organization, I want to use this opportunity to expand on several proactive measures you should take.  EH&S compliance is a management responsibility and not solely the responsibility of the environmental manager or the health and safety manager.

There are several steps everyone can take to improve your company’s compliance performance:

  • Focus on compliance daily – compliance is not an initiative; it’s the foundational element of your ability to stay in business.
  • Read all of your facility and operating permits and the associated regulations; know and understand their conditions.
  • Be certain that draft permits are reviewed by the appropriate legal and compliance experts – you have to abide by all conditions imposed.
  • Clearly identify and train persons assigned to be responsible for specific compliance requirements governing your operations.
  • Walk your sites.  There’s no excuse for poor housekeeping.
  • Establish a solid recordkeeping system to document compliance with all requirements including training, inspections, and other facility activities.

Identified compliance problems will not go away on their own; fix them.  If you decide not to spend or delay spending capital to fix an existing compliance problem, you must have approval from senior management.  You should never conduct a “risk of getting caught vs. cost analysis” on any legal or regulatory compliance matter.

Establish a procedure to report incidents up through the organization to senior management and develop a root cause analysis process.  You must have little tolerance for repetitive violations, especially where the repeat violation is preventable.  Enforcement agencies are very unforgiving the second time around. It takes putting specific processes in place and scheduling follow-up for assigned tasks.

Start a regular cadence of training events, compliance alerts, and a deeper focus on the underlying causes for your non-compliance citations.  Your employees should become partners in the advancement of a more compliant company culture.

Finally, best-in-class companies are all using some phase of a compliance assurance tool, using software as a compliance calendar and tracker for your active operations.  These software programs have evolved to be adaptable to any operation with user friendly applications all employees can embrace as part your operating culture.

Mapistry’s Sustainability and Business – Impossible Without Environmental Compliance blog concluded with the view that you should commit to achieve environmental compliance before you build your sustainability platform.  Only then will your company have built the foundation to move beyond compliance.

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