Today, U.S. Environmental Protection Agency (EPA) Assistant Administrator of EPA’s Office of Enforcement and Compliance Assurance (OECA) Susan Bodine issued guidance regarding OECA enforcement discretion in the wake of the coronavirus (COVID-19) COVID-19 pandemic. EPA intends to focus its resources largely on situations that may create an acute risk or imminent threat to public health or the environment. The guidance, which is retroactively effective to March 13, does not have an end date but EPA commits to reviewing the policy regularly and to providing a seven day notice of its termination on OECA’s guidance page.

The guidance acknowledges that COVID-19 and related government social distancing restrictions may affect facility operations and performance, and addresses steps that regulated entities must take for any noncompliance to be considered for enforcement relief under the guidance. Specifically, the guidance states that entities should make every effort to comply with their environmental compliance obligations. Where compliance is not reasonably practicable, entities should minimize the effects and duration of any noncompliance caused by COVID-19, identify the nature of the noncompliance, how it was caused by COVID-19, return to compliance as soon as possible, and document all of this information. The guidance does not apply to criminal violations, nor does it affect any authorized actions by states or tribes or any other existing statute or regulation.

Routine Compliance Obligations

The guidance notes that COVID-19 may affect a company’s ability to perform routine compliance monitoring, integrity testing, sampling, laboratory analysis, training, and reporting or certification, and recommends that entities use existing procedures to report this noncompliance but that both the administering agency and your EPA region should be notified. If no reporting procedures exist, entities should maintain this information internally. EPA explains that it does not expect to seek penalties for these types of violations where EPA concurs that COVID-19 was the cause of the noncompliance and the entity can produce supporting documentation. EPA does not anticipate seeking any “catch up” monitoring once the guidance is no longer in effect, but for other monitoring such as annual or bi-annual monitoring, entities should take reasonable measures to resume their normal compliance activities.

Settlement Agreement and Consent Decree Milestones and Reporting

The guidance also addresses administrative settlement agreements and indicates that EPA will generally not seek penalties for any missed milestones and that entities should use the notice procedures set forth in their agreements. Regarding civil judicial consent decrees, EPA will coordinate with the U.S. Department of Justice (DOJ) to exercise enforcement discretion regarding stipulated penalties for any routine compliance obligations that are missed due to COVID-19, but the guidance recognizes courts’ authority to exercise their own judgment.

Facility Operations

EPA expects entities to continue to manage and operate their facilities safely and EPA will focus on acute risks or imminent threats to human health or the environment in coordination with state or tribal authorized programs consistent with existing federal-state partnership guidance. Regarding enforceable permit limitations on air emissions and water discharges or other unauthorized releases, the guidance states that the entity should notify the implementing authority as quickly as possible with details of the noncompliance, and EPA will consult with authorized states or tribes to determine the appropriate response. Regarding RCRA waste handling, the guidance provides that so long as proper labeling and storage are implemented, waste generators who fail to transfer waste off-site within the time periods required by RCRA will not be deemed to be storage or disposal facilities and EPA will not escalate very small quantity generators or small quantity generators to a higher generator status due to the generator’s inability to arrange for shipment of hazardous waste due to COVID-19. The guidance does not apply to activities being carried out under Superfund and RCRA Corrective Action enforcement instruments and EPA has indicated that it will issue separate guidance to address these activities.

Public Water Systems

Despite the general flexibility provided in the guidance, EPA is heightening its expectations for public water systems in light of their critical importance to public health and continues to expect compliance with all applicable operations, maintenance and sampling requirements. EPA believes monitoring required under National Primary Drinking Water Regulations to be the highest priority in the event of any worker shortages, followed by nitrate/nitrite and Lead and Copper Rule monitoring, followed by contaminants for which a specific system has been non-compliant.

Other Components

The guidance includes a commitment to more tailored short-term No Action Assurance for facilities that are considered critical infrastructure, with Assistant Administrator Bodine serving as the arbiter of such determinations on a case-by-case basis. EPA notes that it will continue its oversight of state programs as practicable and will take COVID-19 into consideration when conducting such reviews. The guidance does not relieve any responsibilities for the prevention or response to, or reporting of accidental releases of oil, hazardous substances, hazardous chemicals, hazardous waste, or other pollutants.

Companies that may need to rely on this guidance should carefully and deliberately document the noncompliance and how COVID-19 is the cause of the noncompliance.

For additional information regarding the OECA guidance and general EPA enforcement procedures, please contact Brooks Smith or Patrick Fanning.

The Troutman Sanders Corporate team has published the following article on COVID-19:

In a press release dated March 25, 2020, the United States Securities and Exchange Commission (the “Commission”) Chairman Jay Clayton encouraged “public companies to provide current and forward-looking information to their investors . . .” while continuing to prioritize health and safety during the ongoing global pandemic. In conjunction with this statement, the Commission’s Division of Corporation Finance (the “Division”) released CF Disclosure Guidance: Topic No. 9 (the “Guidance”), which provides the Commission’s current views regarding disclosure and other securities law obligations that companies should consider with respect to COVID-19 and related business and market disruptions.

Continue reading

The onset of the public health crisis caused by the spread of the coronavirus (COVID-19) has led to a global shortage of hand sanitizer. Businesses attempting to cope with new challenges presented by COVID-19 may be interested in retooling current manufacturing or other processes to begin developing hand sanitizer for external distribution or even internal use. In support of these efforts, the federal Food and Drug Administration (FDA) has issued guidance for both companies that are not currently authorized by the FDA to manufacture hand sanitizer companies and pharmacists in state-licensed, federal, or registered outsourcing facilities compounders that may be interested in producing hand sanitizer. Companies that adhere to this guidance and maintain sufficient documentation should be able to manufacture hand sanitizer for external distribution or internal use without enforcement exposure from the FDA.

According to the guidance, the FDA will not bring any action during the pendency of the public health crisis associated with COVID-19 against a company or compounder that produces hand sanitizer in accordance with certain requirements. These requirements, although slightly different for companies and compounders, detail the formula and process that must be used to ensure that hand sanitizer is properly made. According to the FDA guidance, only those companies and compounders that comply with all of the requirements detailed in the guidance will be shielded from FDA enforcement throughout the duration of the COVID-19 public health crisis.

As the central focus of the guidance documents, the FDA provides the formula and the percentage of different ingredients that must be used by companies or compounders to develop hand sanitizer. These ingredients, which must be United States Pharmacopoeia (USP) grade ingredients, and their percentage in the final product formulation include:

  1. Alcohol (ethanol) (80%, volume/volume (v/v)) in an aqueous solution denatured according to Alcohol and Tobacco Tax and Trade Bureau regulations in 27 CFR part 20. In addition to USP grade, alcohol used by companies may also be Food Chemical Code (FCC) grade.
    or Isopropyl Alcohol (75%, v/v) in an aqueous solution;
  2. Glycerol (1.45% v/v);
  3. Hydrogen peroxide (0.125% v/v); and
  4. Sterile distilled water or boiled cold water.

Companies or compounders may not include any other inactive or active ingredients other than those enumerated above because that may impact the quality or potency of the product.

In addition to the formula, the guidance also requires companies and compounders to pay particular attention to the amount of the ethanol or isopropyl active ingredient in the final product to ensure accuracy. Under this requirement, companies are required to keep a “simple record” of the controls taken to ensure that each batch of produced hand sanitizer complies with the formula prescribed by the FDA. Additionally, the guidance requires compounders and companies to prepare hand sanitizer under sanitary conditions and that equipment used during the preparation of the product is well maintained. For compounders, the FDA requires the preparation of the hand sanitizer to be done under “conditions routinely used by the compounder to compound similar nonsterile drugs.”

After production, both companies and compounders alike are required to appropriately label all of the produced hand sanitizer. The FDA has provided specific labels that correspond to the type of hand sanitizer and its intended use. These labels can be viewed here.

For companies, there are two additional requirements that must be followed under the guidance. First, companies must be able to implement and use the “most accurate method of analysis available for verification of alcohol content in samples of the finished drug product before each batch is released for distribution.”  These methods may include, but are not limited to, gas chromatography, alcoholometer, or other chemical analysis of at least equivalent accuracy. Second, companies interested in manufacturing hand sanitizer must also register their facility and list the products being temporarily produced in the FDA Drug Registration and Listing System (DRLS). The DRLS can be found here. After completing the registration and listing, companies will receive automatic confirmation from the FDA and will be able to immediately begin manufacturing and distributing hand sanitizer products.

For any questions related to the FDA’s guidance or properly registering a company on the DRLS, please contact Rob Browne.

Over the past week and in just the last 24 hours, several federal and state agencies have issued guidance documents and orders impacting the oil and gas pipeline industry. Through this guidance and other orders, federal and state governments are recognizing the oil and gas industry as critical to responding to COVID-19, while at the same time providing for some flexibility in the likelihood that operators will face resource and staffing constraints in executing their pipeline safety compliance obligations.

Beginning with PHMSA, the Agency issued two guidance documents. PHMSA’s Notice of Enforcement Discretion provides relief with respect to operator qualification (OQ) and control room hours of service and certain training requirements. The Agency will also consider whether to exercise its discretion with respect to drug and alcohol pre-employment and random testing beyond what is already provided in the regulations. While not addressing the possibility of emergency special permits as an option, the notice indicates that PHMSA will “exercise discretion in its overall enforcement” of other aspects of the regulations, in order to provide “operators with the flexibility to maintain normal operations while ensuring public safety and protection of the environment.”  PHMSA stresses that adequate documentation and prompt communication will be key to operators availing themselves of the Agency’s enforcement discretion and provides an email portal for operators notifying PHMSA of compliance issues.

PHMSA also issued Guidance to State Partners Regarding COVID-19 providing, in contrast to the notice, that PHMSA will work with industry and state partners “to address any emergent need for special permits or State waivers and, if appropriate, reschedule some inspections as a result of the COVID-19 outbreak.” It also states that PHMSA and relevant state partners will nevertheless continue to prioritize “safety-sensitive inspections and investigations.” Notably, the guidance further emphasizes the essential nature of oil and gas pipeline infrastructure by stating that it is “critical to the safety of the transportation and energy supply networks and the economic stability of our Nation.”

Along those same lines, the Cybersecurity and Infrastructure Security Agency (CISA) within the Department of Homeland Security issued Essential Critical Infrastructure Workers guidance clarifying that oil and gas pipeline infrastructure are expressly included as part of both the energy and transportation sectors. While the memorandum is advisory in nature, CISA offers guidance on critical infrastructure “to assist prioritizing activities related to continuity of operations and incident response, including the appropriate movement of critical infrastructure workers within and between jurisdictions.” This guidance should be useful to operators, particularly as states announce that non-essential businesses must close. Some states, such as Pennsylvania, expressly excepted oil and gas pipelines from its mandate but others may be less specific.

As state-specific orders increasingly mandate the closure of non-essential businesses, it is likely that more state agencies with pipeline safety jurisdiction will be issuing advisories or orders. The Texas Railroad Commission, for example, already issued specific pipeline safety waiver guidance for intrastate oil and gas pipelines which involves a 60-day review process by the Commission including an “open meeting.”  We expect that approach will be modified, however, to be consistent with PHMSA’s state partner guidance and Notice of Enforcement Discretion. In Tennessee, the Public Utility Commission issued an “Ongoing Request for Information” to intrastate utilities, finding that “continued access to critical utility services is a matter of national security and vital to the public health, safety, and welfare,” and requiring ongoing weekly reports of emergency operational and response plans.  

Operators should continue to modify and implement their compliance management strategies in the wake of COVID-19, including best practices. It will be important to document justifications for variances from regulatory compliance deadlines and activities in the event that issues are raised in future audits. In addition, there may be higher risk variances that require an emergency special permit application under 49 C.F.R. § 190.341 from PHMSA or a state partner. Operators should also continue to work with relevant PHMSA Regions and state partners directly on these issues and in coordination with the trade groups for alignment in approaches.

Developments across the country are changing quickly, and we will continue to provide relevant updates on issues impacting the oil and gas industry. In addition, Troutman Sanders and Pepper Hamilton maintain a COVID-19 dedicated Resource Center which provides information that might be helpful, particularly a “toolkit” map with links to various state and local government directives.

For more information on managing compliance during the coronavirus outbreak, contact Catherine Little or Annie Cook.

The coronavirus is causing marked disruption in the U.S., with increasing impacts across the country. Pipeline, terminal and LNG facilities are no exception, and many operators have been reviewing or implementing their contingency and emergency response plans. The current situation falls outside of most existing plans, however. With staffing concerns, travel limitations and other unforeseen issues, we expect operators will be presented with some challenges in the coming weeks in meeting all pipeline and LNG safety legal requirements. For example, we expect there may be issues with maintaining sufficient adequately trained and qualified staff for control rooms or field positions responsible for inspection and maintenance.

DOT and PHMSA have not yet issued any official guidance with respect to the potential regulatory issues posed by COVID-19. Consistent with CDC guidelines, we understand that DOT has at least moved to implementing internal changes to minimize in person contact and visits to DOT facilities will be limited. DOT is well acquainted with the potential challenges that could arise and PHMSA itself has historically issued preemptive emergency advisory guidance in advance or in the aftermath of major natural disasters (i.e., hurricanes, flooding, etc.).

PHMSA’s prior emergency guidance has in the past clarified that PHMSA will provide relief from and waive certain Operator Qualifications (OQ) and pre-employment requirements during response and recovery periods. PHMSA regulations also expressly allow the Agency to waive compliance with regulatory requirements during emergency situations where compliance may not be possible or feasible and based on an operator’s apply for emergency waivers (special permits) in those instances. 49 C.F.R. § 190.341(g) (for pipelines and LNG facilities); 49 C.F.R. § 107.177 (for hazardous materials). Emergency waivers (or special permits) last for a period of up to 60 days, although they are renewable after notice and an opportunity for comment. Id.

We anticipate that PHMSA may issue an emergency advisory to address potential impacts of the COVID-19 pandemic and provide some relief from certain regulatory requirements, such as OQ and training. Informal resolution with PHMSA for specific issues should also be available to operators. If you have not already, it may be prudent to engage with your Regional Director(s) or the Agency’s Headquarters directly, as appropriate. Further, bear in mind that PHMSA maintains enforcement discretion and provides for penalty mitigation for issues that are disclosed to the Agency and addressed by operators. In the event that these issues are ever raised in subsequent inspections, documentation of the applicable communications with PHMSA and any relief allowed by the Agency will be helpful.

We will continue to provide updates regarding these issues as they arise. As with any national emergency, the industry and the Agency’s goals are aligned and focused on the safety of the public and continuing to meet our nation’s energy needs. Please do not hesitate to contact us to assist you in further evaluating these issues as they unfold and helping to identify solutions.

The Pipeline and Hazardous Materials Safety Administration (PHMSA) and the Transportation Security Administration (TSA) recently finalized an Annex to a longstanding Memorandum of Understanding (MOU) regarding pipeline safety and security. This Annex comes just weeks after a publicized natural gas pipeline cybersecurity intrusion and responds to several recommendations from the Government Accountability Office (GAO) discussed in our earlier alert to update the prior Annex which had not been reviewed or revised since its inception over 14 years ago. The updated Annex emphasizes information-sharing and coordination between the agencies and signals that the agencies are moving forward on satisfying outstanding GAO recommendations. While this is a step in the right direction, questions remain whether TSA is the appropriate agency to oversee pipeline security and whether existing voluntary standards should be mandatory.

Since September 11, 2001, the U.S. oil and gas pipeline network has been a target of both physical security and cybersecurity threats and intrusions. In particular, oil and gas pipelines are a potential terrorist target due to the possibility of both the disruption of critical product supplies across the country and impacts to the public and the environment. The Department of Homeland Security issues cyber vulnerability alerts almost on a daily basis to the energy industry, but many intrusions are not widely publicized because operators typically report them to and address them with the FBI, and they are treated as classified information.

PHMSA, with the Department of Transportation, is responsible for regulating pipeline operational safety, while the Department of Homeland Security’s TSA is responsible for pipeline physical safety and cybersecurity. Both PHMSA and TSA have come under increased scrutiny from Congress and others to update outdated agreements and provide for mandatory security measures. TSA in particular was criticized for being largely understaffed, with a team of only five or so employees in this area who lack cybersecurity experience, and for failing to send a representative to Congressional Pipeline Safety Act reauthorization hearings. Existing TSA security standards remain voluntary and were last updated in 2018 in TSA’s 2018 Pipeline Security Guidelines. Other relevant documents, however, have not been updated to better reflect more recent cybersecurity threats and means to address those threats.

Revised provisions of the Annex provide for information sharing through an “interagency protocol” with respect to incidents and security threats and expressly note that the agencies will coordinate prior to conducting inspections of cross border facilities that are operated from control rooms in Canada. The agreement also includes new language regarding coordination with DHS’s Cybersecurity and Infrastructure Security Agency (CISA) and the Department of Energy and in particular with regard to response and recovery efforts following natural and man-made disasters. Strategic planning will also include consensus concerning measures to minimize the consequences of man-made and natural disasters involving pipelines. Much of the remainder of the updated Annex, however, is not new.

Although PHMSA has not historically held itself out as an expert in security issues, close cooperation and resource sharing between PHMSA and TSA may enhance TSA’s ability to more effectively address the issues the industry has been facing. PHMSA and TSA have committed to reviewing the MOU at least once every five years, to ensure their strategies and efforts remain up to date and revise it when needed. That said, given the ongoing pressures on the industry from security and cybersecurity threats, and the government for managing those threats, the possibility of mandatory requirements remains.

The current Administration has focused on reforming federal administrative agency enforcement by emphasizing transparency, due process, and fair notice. The concepts of due process and fair notice are well-established legal precepts, and they are critical to the regulated community. For a variety of reasons, however, administrative agencies may not be consistently adhering to these obligations in practice. Efforts that began with Executive Orders last year continue in 2020 with a recent Office of Management and Budget (OMB) request for comments on improving enforcement processes. Oil and gas industry trade groups and individual operators should take advantage of the OMB’s request for comments to improve enforcement processes at many federal agencies, including the Pipeline and Hazardous Materials Safety Administration (PHMSA). Comments are due by March 16, 2020.

Continue Reading Administrative Enforcement Reforms Continue

In a decision with significant potential implications for infrastructure construction projects, the U.S. District Court for the District of Columbia recently remanded, but did not vacate, the Fish and Wildlife Services’ (“FWS”) 2015 decision to list the northern long-eared bat as threatened under the Endangered Species Act (“ESA”). The Court also vacated a component of the FWS and National Marine Fisheries Services’ (collectively, “Services”) significant portion of its range policy (the “SPR Policy”) regarding how to evaluate whether a species is endangered. The SPR Policy, in place since 2014, formed the basis for other listing decisions and its vacatur has implications beyond the long-eared bat.

Continue Reading Energy Infrastructure Projects Take Heed: FWS Northern Long-Eared Bat Listing Remanded and SPR Policy Vacated

On January 10, 2020, the Council on Environmental Quality (CEQ) published the long-awaited proposed rule to amend its regulations implementing the National Environmental Policy Act of 1969 (NEPA). The statute, sometimes pejoratively referred to as a “paper-tiger,” requires a federal agency to take a hard look at the environmental impacts of certain proposed projects, but does not mandate any particular outcome.

Continue Reading Council on Environmental Quality Proposes Long-Awaited NEPA Regulations Overhaul

PHMSA recently finalized a rule that significantly revises certain aspects of liquid pipeline safety regulation under 49 CFR Part 195.  Nearly nine years in the making, the final rule is intended to address PHMSA and NTSB accident investigation findings from the Marshall Michigan spill in 2010 as well as 2011 and 2016 outstanding Congressional mandates and GAO recommendations.  A version of this rule was initially scheduled for publication in the Federal Register in the last week of the prior presidential administration in 2017.  It was held back as a result of the regulatory freeze and subsequent deregulatory review by the Trump administration which pared down certain changes in the recent final rule.

Continue Reading Final Rule Imposes Expansive New Requirements for Liquid Pipelines