NTTC, Law Association Join Forces To Discuss Environmental Issues
Jun 1, 2000 12:00 PM
TANK TRUCK carriers involved in environmental damage can face legal repercussions ranging from minor civil penalties that involve small fines to criminal violations that could result in a prison sentence.
Those and other legal concerns were discussed at the National Tank Truck Carriers Tank Cleaning Council meeting in New Orleans April 17-18. NTTC joined forces with the American Law Firm Association (ALFA) to present information relative to the transportation industry. The legal association is comprised of 117 member firms.
"ALFA's members strongly believe in client education, feeling that the best client is one who is fully aware of, educated in, and conversant with, the issues surrounding the legal matters with which his or her business is confronted," according to information from the association.
At the NTTC meeting, topics included facility regulation, risk benefit-risk management plans, accident and incident managing, insurance issues, and acquisition risks.
One topic discussed pertained to federal regulations and their enforcement. Wash racks and other companies in the tank truck industry can expect increases in Environmental Protection Agency (EPA) inspections, said David Losee, attorney with Halloran & Sage LLP, Hartford, Connecticut.
"It's not a question that will you be inspected, but when," he said. To prepare for inspections, he recommended that companies conduct a self-compliance audit to uncover problems that can be addressed before an inspector arrives. Familiarity with the manual that is used for inspector training can aid companies in making their own inspections.
"If you can understand the inspector training program and what inspectors will be looking for when they enter your facility, you will have the requisite information for development of a comprehensive plan to prepare your business and staff for an inspection," he said.
When inspectors arrive on site, escorts need to stay with inspectors at all times. "Have your response team meet them at the gate," he said. And most importantly, have paperwork in order, he added.
Several occurrences may trigger inspections, including citizen and employee complaints, permit applications, and reporting requirements. If an inspection is inevitable, one way to prepare for it is by having well-organized and workable risk benefit-management plans.
"Every organization, no matter how large or small, inherently possesses exposures to risk," said Steven Hoch of Haight, Brown & Bonesteel LLP, Santa Monica, California. "The operations of almost every organization are dynamic, changing constantly, and rarely stationary. The operation has to be looked at on a regular basis."
For a program to succeed, it should include risk management staff in accounting and finance, law, human resources, and all other operations.
"It's really risk benefit," he added. "It's really good, basic, bottomline business."
A well-conceived and comprehensive risk management program requires a significant commitment of time and resources by the company. Benefits come from reductions in misuse, theft, and/or losses to equipment and property, frequency and severity of accidents, expenditures of claims, and legal expenditures-and finally, increased productivity. "The risk management process helps you in the long run to save money," Hoch said.
Risk management enhances the ability of a company to identify perils and risk exposures. "That is probably the most important step in the process," he said. "All other elements of the risk management process flow from this initial step."
Core Function Robert Martineau Jr of Waller, Lansden, Dortch & Davis PLLC, Nashville, Tennessee, pointed out that environmental risk management is a core business function. Objectives include assessing ability of management, supervisors, and staff to implement top management environmental policies.
Despite the best risk management programs, accidents do occur. "Successfully navigating the minefield of regulatory requirements pertaining to the period immediately after an accident or spill is critical to keeping the company out of trouble, but that hardly ends the matter," said Robert F Parker of Beckman, Kelly & Smith, Hammond, Indiana. In some cases of serious contamination to the environment or danger to human health, criminal liability can be the result. "In these cases, it's not just money," he said.
Carol G Snider of Damon & Morey LLP, Buffalo, New York, discussed the term, toxic tort, defined as an injury caused to employees or others by exposure to a toxic substance. She advised companies to set up legal arrangements for such a case as a precautionary plan.
"While many of the injuries are not immediately obvious, others immediately manifest themselves," she said. Claims may include breathing difficulties, chemical sensitivity, cancer, blood disorders, and even fear of future injuries as a result of the exposure.
Insurance Coverage On the subject of insurance, Chris A Mattison of Hall & Evans LLC, Denver, Colorado, said companies must understand their risk involved with damage to the environment and tailor their insurance coverage to match that risk. Some insurance companies are trying to exclude environmental coverage. He said environmental damage concerns are one reason insurance premiums are on the rise.
"Evaluate the viability of the insurance company and look at how they pay their claims," he advised. "Policies are negotiable." It's not enough to take a cursory review of the policy, he added. It's important to understand the policy to be sure that all risks are covered.
"You must understand the ambiguous wording in policies." He recommended a separate policy that covers pollution incidents.
As for filing claims, the insured is required to notify the insurer of a claim or occurrence that might give rise to a claim under the policy, said George D Fagan of Leake, Andersson & Mann LLP, New Orleans, Louisiana.
"Give as much notice as you can," he emphasized.
Despite the extensive legal issues, there are some simple precautions to take. "Businesses involved in the handling, transportation, storage, manufacture, distribution, use or sale of toxic, hazardous or similar substances, and waste should maintain and preserve copies of all insurance coverages," he said. "Documents should be kept in safe, dry, and accessible locations due to the potential for claims involving latent or long-term claims. If you do not currently have these policies stored in more than one place, it is highly recommended that you do."
Finally, companies can use an attorney if an insurance company is denying a claim. "Insurance companies are obligated to protect the insurer, and you have alternatives if they fail to do so," he said.
Criminal Charges However, the attorneys pointed out that insurance for criminal penalties is not available.
"One of the most significant changes in Occupational Safety and Health Administration enforcement in the past 10 years has come in the area of criminal prosecutions," said Thomas P Gehl of Whyte Hirschboeck Dudek SC, Milwaukee, Wisconsin. "The trend matches other areas in the federal system in which corporate officials and boards of directors have been held criminally liable for violations committed by the organization."
He advised managers to commit to preparation and attention to details regarding compliance with federal standards, which can serve as a protection against the potential criminal liability. "With the sizable financial penalties, as well as the potential loss of liberty, this is one area that is most definitely worth paying attention," said Gehl.
Acquisitions Subjects that surround legal repercussions from environmental damages also address situations that occur when companies are involved in acquisitions.
"The acquisition of a company can be a risky undertaking when you consider the potential liability that may be acquired along with the company," said E E Laird III of Daniel Coker Horton & Bell PA, Jackson, Mississippi. "In most cases, the selling company will be subject to various types of liability, some of which it knows about, and others that have not yet surfaced."
Two potential liabilities that may be present are product liability and environmental clean-up costs. "A prospective buyer should include a provision in the contract that allows it the opportunity to conduct an investigative background into the company's operations, including a review of its books and public records pertaining to the company," he said.
He pointed out that an environmental audit or survey is "perhaps the most important tool a buyer has in limiting his environmental liability in the purchase of a company."
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