Environmental Crisis Management Case Studies
Yes, weird things do happen and, as lawyers, we sometimes get involved to resolve these matters. Environmental litigation provides many interesting studies. Here are just a few.
Don't Light the Cigarette!Synopsis: Refined products upland terminating facility suffered underground manifold leak of jet fuel. The invidious leak, small in ongoing proportion, continued over a long period of time. A residential subdivision was nearby. The leak was eventually discovered when a woman stepped into her bath, which was full of jet fuel rather than water. There were three community water wells servicing the subdivision. Two were adversely affected and had to be permanently shut-in. The area, a semi-arid climate, was entirely dependent on groundwater. Members of the subdivision filed suit. Crisis Management Response. All regulatory notices were timely given. A plant employee was assigned as OSC for the plant. After consultation with upper level management as well as plant management, it was agreed that corporate executives would not participate as spokesmen. The company agreed upon an open-communication model. "Fence talks" were conducted, in which the local management -- on very good community terms -- would visit with the nearby residents, literally over their fence lines. The message was kept short and understandable. The company intended to provide regular information regarding the response measures. Further, with little delay the company, subject to reservation of rights, drilled, completed and piped to the residences a substitute water supply that was shown to provide more immediate water supply capacity, and a longer lifespan as well. As data developed, it was provided to the agency and generally discussed with the neighbors. As the emergency subsided, the company implemented long term recovery measures. Media was managed successfully. The Litigation. As a result of a well implemented community response plan, which included a town hall opportunity, only a few of the residents actually sued the company. The case went to final bench decision in Federal Court. The Federal Judge found that the company had materially mitigated the injury to the landowners. Judgment in the amount of $3,000 for out-of-pocket sampling costs was entered. All other claims resulted in a take nothing judgment. Critique. The successful crisis management points in this matter included a well implemented community action program, reducing the number of original claimants. The prompt drilling, completion and delivery piping of a replacement well was vital to the Court's finding. (c) Paul Bohannon 2014
Here Comes the FBI!Chemical manufacturer in the mid-Atlantic region manufactured product under a regulatory exemption. Absent the exemption, the company would have been recycling hazardous wastes. The company's home office was in another geographic region of the country. The company received an inquiry from US EPA regarding an unrelated facility -- one neither owned nor operated by the company. The response was left to local management with virtually no home-office oversight. A while later, EPA swooped in on the plant unannounced, with FBI helicopters overhead. EPA and FBI entered the plant operations office, sealed all computers and file cabinets. EPA gave the company four hours to identify all documents necessary for continued plant operations. Upon expiration of that time, EPA removed the file cabinets and computers to the Atlanta Regional Office -- which was not the regional office assigned to the enforcement matter. Of course, EPA did not disclose immediately that the materials were removed to Atlanta. EPA then advised company management that it was under investigation for criminal violations of the RCRA recycling provisions. Corporate management initiated immediate crisis management steps. 1. First, the company hired an independent environmental crisis manager. 2. Next, The company immediately sent an audit team to investigate the documented source of its feedstock. Because the records had vaporized into EPA's possession, this was a daunting task. The audit team commenced with personnel interviews, then proceeded to contact transport vendors, seeking manifests and bills of ladings. 3. At the same time, the company retained local criminal counsel, who reported to the independent environmental crisis manager. Criminal counsel met with local employees -- all of them, explaining the risks of deceit in responding to the company investigation. After that, the criminal counsel and the independent environmental crisis manager collectively visited with various employees to identify important players. 4. All of the above took place within hours after EPA's departure. 5. Meanwhile, the Company began making computer backups and copying all materials in file cabinets at the home office, as well as at any other facilities owned by the Company. 6. Interviews of home office management were conducted to determine whether there was any knowledge of criminal exposure. After confirming a lack of information of illegal conduct, the management were asked to provide a sworn statement to that effect. 7. Fairly quickly, the company auditors identified improper deliveries of feedstock materials. Specifically, the exemption was based upon the source of the material, so materials coming from unapproved sources were deemed hazardous waste regulated materials. Once the auditors identified this issue, then they developed information identifying the internal culprit: the plant manager. 8. Apparently, the plant manager had been receiving illegal feedstock materials, authorizing company payments on standard prices, and receiving monetary kickbacks from the "vendor." 9. The independent, environmental crisis manager reverified lack of information on management's behalf. 10. A discussion then ensued over company defense strategy. Independent criminal counsel were engaged for the plant manager and for any employee who had any relevant information related to the activity. Further communications with these employees were directed through the newly engaged criminal counsel. 11. Having now established that criminal activity had taken place, the company focused on protecting its shareholders. EPA knew only that things didn't look right, but did not know who, within the company. Thus, at that moment the company was the prime target for criminal enforcement. 12. After further inquiry, the company concluded that the principal target was the sending company, as it apparently had been engaged in this weave of criminal activity with other companies as well. 13. After due consideration, the company determined that it had to honestly present the information it had developed to EPA and the FBI. A confidential presentation was developed and presented to them. This document identified the plant manager, and provided evidence of the deliveries and kickbacks. The presentation also explained in detail the control procedures and how they had been circumvented. 14. At the very time the document was being presented to the EPA and FBI, they also notified (but never provided a copy) employee criminal counsel. 15. After deliberation, EPA concluded that corporate management and the company were not players. They were not indicted. The plant manager went to jail on an extended basis, as well as the sending company and its management. All of these activities were directed by the independent, environmental crisis manager. The lessons included (i) honesty is the best policy, (ii) immediate response is imperative, (iii) shareholder protection is primary. Paul Bohannon Bohannon Legal (C) 2014
Strange Bedfellows...Environmental crises can cause parties that have been historical adversaries to become co-advocates. The lesson here is never close your eyes to opportunities. The EPA was pressing very hard for an incineration remedy in an upland site cleanup, adjacent to a large river. Nevertheless, before EPA could get to that point, it had to comply with the NCP requirements. The RIFS was not even completed. Suddenly, the agency declared it was going to use a novel approach, a shortcut to avoid the due process steps protected by the NCP. EPA's announced intention was to locate an incinerator somewhere in the host community, but not on the problem site since it was not large enough. While the company initially contemplated litigation maneuvers, it reluctantly reached out to the influential river advocates. Much to the company's surprise, even though the river advocates wanted aggressive response measures, they did not trust an incinerator in their midst. A bond developed between these two strange bedfellows. EPA ultimately relented after receiving the combined pressure from the strange bedfellows. And, this tentative trust evolved into a longer term relationship that benefited the company as well as the advocates. (c) Paul Bohannon 2014