The “Sequester”, the mandatory across-the-board spending cuts is causing havoc with federal government activities, including the US EPA and funding to state environmental compliance programs. While the Sequester is causing major personnel cuts, don’t think that you will have any license to not comply with applicable environmental rules and permits. The USEPA and states have developed a large network of cooperation when it comes to enforcement and can enforce rules with fewer personnel, such as by mandatory self-reporting. Because environmental violations can be a source of revenue to the USEPA and state agencies and funding is tight, environmental agencies will likely be more aggressive in enforcing what it believes is violations and will pursue these more doggedly (at least for the largest possible fine).

A case in point is Pelican Oil of Louisiana which entered a plea bargain for Clean Air Act violations, including not properly operating control and monitoring equipment. Pelican had to pay $12 million in criminal penalties plus $2 million for community service that will go toward various environmental projects in Louisiana, saving the state from funding them. This is the largest ever criminal fine in Louisiana for Clean Air Act violations. The trend is for the USEPA, state environmental agencies, and federal and state prosecutors to share information to determine violations and press for the highest monetary fines possible. Even losing some personnel will not stop these trends.

And this does not stop at pure environmental violations. Last week Mr. Rodney Hailey of Clean Green Fuel, LLC was sentenced to 12.5 years in prison for selling $9 million in renewable fuel credits under false pretenses. Hailey was also ordered to pay restitution of about $42.2 million to over 20 companies and forfeit $9.1 million in proceeds from the fraud. Hailey had registered Clean Green Fuel under the USEPA’s Renewable Fuel Standard (RFS) program as a producer of bio-diesel fuel, a fuel derived from renewable resources. To encourage the production of renewable fuel, all oil companies that market petroleum in the U.S. are required to produce a given quantity of renewable fuel or to purchase credits, called renewable identification numbers (RINs) from producers of renewable fuels to satisfy their renewable fuel requirements. Hailey sold over 35 million RINs to brokers and oil companies, when in fact Clean Green Fuel had not produced nor was able to produce such fuel from renewable sources at all. While the USEPA led the prosecutorial effort, they were joined by state and county (Baltimore, MD) detectives and prosecutors to collect and provide the court evidence.

CCES has the experience to provide technical assistance for your environmental compliance efforts. We can assess your compliance program and provide technical advice to improve effectiveness or how to make it more cost-effective. Call us today.