Environmental Compliance 101

Abandoned sites can be damaging to the environment and can lead to expensive cleanups. Take for example the former Dayton Tire and Rubber Facility. In 1987, vandals entered the closed tire and rubber plant to recover salvageable materials. While removing cooper cores from electric transformers remaining at the facility, the vandals drained the Askerol (PCB containing) transformer oil onto the ground. The oil ended up making its way into a nearby creek costing more than $8 million in cleanup cost. If this was not bad enough, consider the abandoned chemical factory in a residential area of Toledo. An eight-year-old boy fell into a shallow acid-lined pit while playing with left-over chemicals at an abandoned factory. The boy ended up hospitalized with chemical burns covering his body. These and similar incidents led Ohio legislature to create the Cessation of Regulated Operations (CRO) Program. 

Since such increased regulatory focus is often a precursor to increased enforcement activity, it is important for potentially affected facility managers to understand the requirements of this program. Established in 1996, the goal of the CRO Program was to prevent threats to human health and the environment created when business owners and operators irresponsibly abandon businesses where chemicals were used, stored or treated. The program requires removal of regulated substances, removal of any contaminated equipment, security the property from unauthorized entry and a reporting requirement to the Ohio Environmental Protection Agency (EPA) that triggers an onsite inspection.

If you own or operate a business that is required to submit annual chemical inventory reports to Ohio’s State Emergency Response Commission (SERC) and you plan to move, sell, shut down or abandon your business, then you will likely become subject to the CRO program requirements unless you are covered by one of the statutory or regulatory exemptions. It is important to note that CRO requirements are not limited to the owner or operator of the facility; mortgage holders and fiduciaries are also liable for certain actions and are subject to civil penalties for noncompliance.

To determine whether the CRO regulations apply to your circumstance, you need to perform a three-part evaluation:

1. Determine whether you are required to submit annual chemical inventory reports to the SERC (i.e., Tier II reports under the Emergency Planning and Community Right-to-Know Act and Ohio’s Right-to-Know program).
   • Are you subject to the Occupational Safety and Health Administration (OSHA) Hazard Communication Standard?
   • Do you, at any time in any 24-hour period, produce or store hazardous chemicals or extremely hazardous substances in excess of the threshold quantities (generally 10,000 pounds and 500 pounds, respectively)?
   • Did you meet both of the above criteria at any time in the three year period prior to CRO?

2. Assess whether the planned change in your business is within the meaning of “Cessation of Regulated Operations."
   • CRO is defined as the discontinuation of termination of regulated operations (basically, any production, use, storage or other handling of any hazardous chemical or extremely hazardous substance), or the finalizing of transaction or proceeding through which those operations are discontinued.
3. Determine whether your facility is exempt from the CRO requirements. Exempt facilities include:
   • Certain oil and gas production operations or equipment
   • Petroleum and piping owned by a public utility or electric light company
   • Any tank or tank system regulated by the Ohio Bureau of Underground Storage Tank Regulation (BUSTR)

Within 30 days from the cessation of regulated operations, business owners must designate a contact person, secure and post warning signs around areas that contain or are contaminated with a regulated substance and maintain security and warning signs. There is also a notification requirement to the Ohio EPA, Local Emergency Planning Committee (LEPC) and the local fire department. This notification requirement triggers a compliance inspection of the facility by the Ohio EPA.

You have 90 days from the cessation of regulated operations to submit information about any hazardous chemicals and potentially contaminated tank or vessel at the property to the Ohio EPA, remove and lawfully dispose of all regulated substances onsite and transfer offsite any debris, non-stationary equipment, furnishings, containers, motor vehicles and rolling stock that contains or are contaminated with a regulated substance. There are also provisions in the law for temporarily discontinuing and then re-starting operations that let you waive many of these requirements.

If you are a first mortgage holder, a fiduciary, an indentured trustee, or a court-appointed receiver, and if the owner/operator fails to comply with the above requirements, you must generally comply with the notice and security requirements, including the requirements regarding inspection and maintenance of the security measures, within the following time frames:

1. For a first mortgage holder, within 15 days of abandonment by the owner/operator.
2. For a fiduciary, within 60 days after receiving actual notice of the CRO.
3. For an indentured trustee, unless you have petitioned the court for appointment of a receiver, within 60 days of receiving actual notice of the CRO.
4. For a receiver, within the time frames established by the court.

Fines for failure to comply with the CRO can range from the response costs incurred by the government as a result of noncompliance to up to $25,000 and four years imprisonment for each day of violation.

Summary
Ohio’s Cessation of Regulated Operations regulations impose specific requirements on the owner or operator of the facility and on others with a financial interest in the facility or the associated real property. It is important for those with responsibilities under these regulations to understand those requirements both for the protection of public health and the environment and due to the substantial potential penalties associated with noncompliance.