Playing By The Rules

Second only to the Internal Revenue Service in its ability to strike fear and anguish, the U.S. Environmen-tal Protection Agency (EPA) has its own way of getting what it wants.

Federal regulatory agencies have wide leeway to investigate and gather information on possible violations of laws. For its part, EPA persistently and effectively uses its authority under Section 104(e) of the Superfund law to obtain information on the nature and amount of wastes that generators and other handlers sent to hazardous waste sites.

Answering Superfund information requests has become an annoying but critical routine for many companies. EPA can require any company, whether or not that company is potentially liable under Superfund, to furnish reasonably described and relevant information or documents relating to waste materials handled, a release or threatened release of a hazardous substance or pollutant, and the company's ability to pay for or perform a cleanup.

How a company responds to such requests can affect its liability to the government and private parties for site cleanup costs and damages. EPA is quick to seek civil penalties against individuals and firms who ignore or fail to fully honor these requests and, in the past, has won judgments as high as $450,000 for noncompliance.

Some respondents ask EPA for permission to limit their investigation and response. If the agency consents, the limited answer will not trigger a civil penalty action. But if a company unilaterally decides what's relevant and responds less than fully, it should carefully explain the reasons for holding back and then hope for the best.

To avoid burdensome and expensive rummaging through business files and records, smart companies should develop a strategy for gathering and disclosing information.

Create a focal point for the response effort by assigning the task to a responsible individual or department. This leaves facility or division personnel free to manage day-to-day operations and will help assure consistent responses and an overall sensitivity to and awareness of the "big picture" within the company. Select a response coordinator who understands the theory and practice of federal and state hazardous waste management laws as well as overall company operations including waste management practices and record keeping.

Next, safeguard internal communications with confidentiality protection. A company can benefit from the attorney-client privilege and attorney work product shield if an outside legal counsel manages the response from the beginning. If a company employee serves as a response coordinator, outside counsel should be used to launch the response with a carefully worded letter to the coordinator. In addition, early and continual participation by counsel will keep the information-gathering process on target and speed the flow of critical advice to the company on potential liability. The investigative process should guard against creating new documents and records that purport to characterize or summarize the raw information and materials being produced.

Since EPA regional offices no longer require a Freedom of Information Act request before releasing materials, use whatever EPA records reportedly link the company to the site. EPA's data can uncover possible defenses, limit the relevant time frame, identify transporters and other waste handlers and help to narrow the focus of the internal review.

It is important to locate and engage key company or facility personnel. Environmental officials want to know what kind of waste materials the company disposed of, where the company took them, and if the company ever owned or managed the disposal site. Accordingly, the response coordinator must locate and contact individuals who know about waste generation, disposal practices, hauling contractors and related manifests, purchase orders, invoices and land records. Make sure these individuals understand why EPA is asking for the documents and information and are capable of conducting a thorough search.

In short: papers lead to papers and people; people lead to other people and still more papers. To assure consistency and confidentiality, have the legal counsel or the response coordinator, under specific instructions from legal counsel, conduct interviews.

Do not supply bare information. The coordinator should seize the opportunity to downplay troublesome facts and emphasize the circumstances that diminish the company's potential liability. To establish credibility, recite the extensive nature of the investigation and the company's willingness to fully cooperate. If the company believes EPA will inevitably list it as a potential responsible party, name other possible targets and give reasons why EPA should pursue them. To avoid common pitfalls when responding to the Environmental Protection Agency, follow these guidelines:

* Don't misstate the facts. Intentional false statements to the Environmental Protection Agency can re-sult in heavy fines and imprisonment. In addition, courts have ruled that any overt ef-fort to avoid learning the truth can be grounds for conviction for knowingly misrepresenting the facts.

* Disclose all known material in-formation and answer the government's legitimate questions. Legal counsel should identify privileged information and other material that EPA may not request.

* Answer what the question asks; provide only the information sought. Check the response a-gainst the request.

* Avoid any speculation or guesswork about what occurred at a site. Limit the response to what the company actually knows at the time it submits the response.

EPA has developed standard forms for information-gathering through its regional offices. While regions do not slavishly insert the model language into all Section 104(e) requests, key phrases appear often enough to justify a ready strategy. Typically, the agency asks companies to respond based on information and documents that former employees, consultants or contractors may have. While a former employee or other service provider may not be subject to the company's control, the company may still be obliged to furnish information on the whereabouts of any such individual or firm.

Companies should be wary of government requests for affidavits and other sworn statements from key in-dividuals to supplement the re-sponse. Neither federal law nor EPA regulations require a company to furnish statements under oath. Even in-advertent misstatements in a notarized document can be grounds for a charge of perjury.

If a respondent believes that an in-struction or question exceeds the le-gal authority of the agency, an objection should be noted in the re- sponse. And, if the company and the government have an understanding on the permissible scope of the responses to one or more requests, it should be clearly stated in the response - even if it appears in earlier notes or correspondence.

Although the process may seem time consuming, a carefully designed and implemented strategy can save time and money - now and later.