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

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

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?

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

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

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

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?

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

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

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.

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?

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

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

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

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

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!