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(Kar) How To Be Ready For An Nov
- 1. How to Be Ready for an NOV – and What to Do Once it Lands on Your Desk! Katherine Roek, Lindquist & Vennum Jeff Hayward, The Valspar Corporation Dana Wagner, Liesch Associates, Inc. November 6, 2012
- 2. What is an NOV? • Notice of Violation – If your business holds a permit, license or approval containing conditions to operate, or operates in a regulated industry, and you violate any applicable conditions or regulations, you may receive an NOV • Examples: air permit, stormwater permit, hazardous waste generator license, product content / labeling requirements – NOVs are generally part of doing business in heavily regulated industries – Format / process may vary per agency; this presentation will provide general recommendations
- 3. Presentation Overview 1. Before – How Can You Prepare? 2. During – What Should You Do When You Receive an NOV? 3. After – What Steps Can You Take to Prevent Another Violation?
- 4. Before: How to Prepare for an NOV • Know Your Business – Set the tone at the top • Make safety a priority • As in-house counsel, educate employees about your role – Identify all permits / licenses / approvals your company holds • If in doubt, bring in a consultant to perform a comprehensive compliance assessment – Identify other "hot topics" in your industry • e.g., OSHA
- 5. Before: How to Prepare for an NOV • Know Your People – Who is in charge of environmental, health and safety (EHS) matters? • Assign responsibilities, hold personnel accountable • Permit / license application identifies a point of contact • Type of business will dictate expertise needed – Consider the role of consultants. • Conduct periodic self-audits • Consider role of Environmental Management System (EMS) – Self-disclosed violations may eliminate gravity-based penalties
- 6. Before: How to Prepare for an NOV • Know Your Regulators – Who issued the permit / license? • Often overlapping agency responsibilities – fed/state/local • Be aware of (and try to stay out of!) turf wars – Each regulator has a personality and an agenda – Understand agency philosophies – Establish and maintain relationships with key officials. • Invite them to tour your facility • Share with them results of self-audits or performance tests
- 7. During: NOV Appears on Your Desk • Set the Tone at the Top (Part 2!) – Best way to prepare for an NOV: don't get one. – But if you do … react appropriately! – Commit appropriate resources to determine: • Did the violation actually occur? • How can it be fixed, and fixed correctly?
- 8. During: NOV Appears on Your Desk • Demonstrate internal support, commit appropriate resources to fixing problem – Identify Knowledgeable People • Involve in-house counsel • Responsible person identified in permit / license application • Corporate officer must sign most transmittals • EHS manager, field / plant staff, contractors – anyone who touched the issue
- 9. During: NOV Appears on Your Desk • Demonstrate internal support, commit appropriate resources to fixing problem (con't…) – Compile Relevant Information • Review the applicable permit / license • Review the spill report / test report that led to the violation • Review the applicable statute / regulation / ordinance
- 10. During: NOV Appears on Your Desk • Call outside counsel (and consultants!) – Remember that the NOV will paint the worst picture of the situation – You have rights! You're expected to contradict any erroneous information that the agency presents. – If you have any question about the permit, license, applicable regulatory authority, etc. – outside counsel and consultants have been through this drill many times.
- 11. After: Respond, and Follow-Up • Tell Your Story (and Establish the Record!) – "Preliminary Response" – take each item in NOV • Everything you say can and will be used against you – resist the urge to overshare! • Don't be afraid to ask for an extension – Provide additional information, if necessary • Does your company have unique operations? • Have you taken mitigating steps since the violation?
- 12. After: Respond, and Follow-Up • Tell Your Story (continued …) – Make sure that everyone who is familiar with the issue reviews and comments on the response – Understand attorney/client privilege and work product doctrine relating to communication between counsel and the company • When it applies • When (and how) to invoke it – Request an in-person meeting with the agency once you send in the response
- 13. After: Respond, and Follow-Up • Finalize the Agreement – In Minnesota, the MPCA will use either: • Administrative Penalty Order (APO) • Stipulation Agreement • Consent Decree – Think about Supplemental Environmental Projects – Counties, other local agencies may have their own form of agreement
- 14. After: Respond, and Follow-Up • Finalize the Agreement (continued …) – Final agreement will contain: • Penalty (which is negotiable!) • Corrective actions – Take this opportunity to consider future changes in business operations • Otherwise known as, don't agree to something to which you can't commit • Or: if the agreement requires you to get a new permit, consider whether there are other changes to incorporate into the permit application
- 15. After: Respond, and Follow-Up • Follow-Up, Maintain Relationships – Are there internal changes / improvements that you can make? – Share every accomplishment with your new friends, the regulators • Request their input, if applicable • Make sure you have a common understanding of when the agreement obligations terminate
- 16. Conclusion • With a few simple steps, you can prepare your company for an NOV – Or prevent one from ever showing up! • Regulators are here to stay – long-term planning is important • Don't be afraid to ask for help!
Editor's Notes
- As to the "part of doing business" comment, this is especially true in industries that are subject to oversight by the Occupational Health and Safety Administration (OSHA)
- Best way to prepare for an NOV – don't get one.Break down barriers. Introduce yourself to plant folks. But maintain the gravity of your showing up …The in-house lawyer should be careful to separate his/her legal advice from his/her business opinions - the privilege would extend to any legal advice rendered, but it does not protect communications that are strictly business-related.Privilege only applies to advice / thought processes, NOT underlying facts or reports.Tip: train the business folks to ask expressly for legal advice … "legal advice is requested on the following …"Interesting note: internationally, courts do not recognize in-house counsel A/C privilegeFor your permits/licenses – also be aware of record retention requirements. May be different than your company's document retention policies.
- Jeff: three categories of people. (1) business people, (2) regulatory people, (3) legal people.Group 1 is key. On the front line. Important for the "set the tone at the top" perspective, and to be connected to Group 2.Group 2 has good subject-matter expertise, but may need help seeing the bigger picture.Group 3 must be aware of the need for outside help to keep abreast of outside developments, identify deficiencies. e.g., law firms / consultants.
- Jeff's 3 "agency personality types": (1) "I'm smarter than you" (2) "Greenie" / "hippie" (3) Drill sergeant Resist the temptation to view them as the enemy. Identify their motivations, and respond accordingly.Philosophies: does this agency have a particular enforcement agenda? "Flavor of the month"?Jeff anecdote re: South Coast Air Quality regulators.
- Internal communication is essential – if the business person at the plant gets the NOV, it often takes too long to go through corporate channels to the regulatory affairs or legal group.The longer it takes to bring together the right people and be responsive there's a danger of hampering credibility.Don't always assume the NOV is correct. Reach out to the right people, especially the business folks on the front line who were involved.Ask – has anything been said to the Agency of which you should be aware?International settings – communication is particularly important, as translation issues may further delay getting the facts straight.
- Delicate balance: trust those responsible for regulatory matters, but if you get an NOV, continue to trust to those same people to handle it appropriately
- Jeff: when to keep it "in-house" vs. when to engage outside help?
- Not all NOVs will warrant this level of response.Have counsel hire outside consultant, if necessary. In other words: proactive, focused communication.
- Back to A/C privilege / work-product doctrine: Could include draft responses circulated. BUT privilege applies only to thought process / advice, not underlying results.As noted before, not all NOVs will dictate this level of response, including requesting a meeting. But some follow-up with the agency is important.IMPORTANT NOTE: you, as in-house counsel, may want to suppress the urge to overstate the significance of the NOV. The more you see, the more you'll understand which carries greater consequence and thus significance. You don't want to be the in-house lawyer who cried wolf. Outside counsel, consultant, seasoned regulatory affairs folk (if you have them) can often give you a sense of when the issues are truly significant.