A costly tangle of paperwork - firm fined for failing to submit form to Environmental Protection Agency

Nation's Business, Feb, 1993 by David Warner

The Zahns, Irwin and son Peter, say they were led to believe that everything was fine at their San Diego electronic-components manufacturing firm following a random inspection by the U.S. Environmental Protection Agency (EPA) in March 1991. But nine months later, the company received a $34,000 proposed penalty from the EPA.

"We were shocked," says Peter Zahn, president of the 160-employee Autosplice Inc., commenting on the EPA fine. "The indication that the inspector had given us was that everything was fine."

The San Diego firm did not harm the environment, says EPA, but it did fail to file paperwork with the agency for 1988 and 1989.

The paperwork--Form R--is mandated by the Emergency Planning and Community Right-to-Know Act (EPCRA), part of the Superfund Amendments passed by Congress in 1986. EPCRA's purpose is to inform the public and community emergency-response services, such as fire departments, about the existence of certain toxic substances in area businesses.

Form R must be submitted to EPA by industries that use certain amounts annually of any of more than 300 toxic substances on a list compiled by the agency. Intentional failure to file Form R is a felony; an unintentional violation is a civil offense. The nine-page report asks for a great deal of information; the most important consists of the purposes, types, and amounts of substances a company uses.

EPA uses the data to establish a national toxic-release inventory to determine where potential toxic releases may occur, to assess the possible exposures to communities, and to determine future regulatory needs.

The right-to-how law deals with releases into the air, land, or water of toxic substances while they are being manufactured, processed, or used in other ways. "Releases" also include waste material in solid form that is on the site but not actually released anywhere.

In Autosplice's case, EPA claims that the company has been required since 1988 to file Form R because it uses brass to make components for printed circuit boards, which are used in products such as anti-lock braking systems and various medical equipment. Brass is not toxic, but its major component, copper, is.

Autosplice does not change the chemical makeup of the brass; there are no releases of toxic copper into the environment. Solid brass is simply stamped into various shapes.

"If you come look at our plant," says Zahn, you would see that "we don't use oozing chemicals." He adds that being fined by EPA is particularly harmful to upstanding businesses "because it's immediately assumed [by the public] that you're a big polluter."

Autosplice has since fried Form R for 1988 through 1991 and is contesting the $34,000 fine, contending that the company recycles 100 percent of the waste brass from its manufacturing process. Companies are exempt from the information-reporting requirements if they have on site no more than a half-pound a year of waste material that contains a toxic substance. Autosplice's case is now before an EPA administrative law judge.

Although the outcome of Autosplice's case hinges on whether it is exempt from the Form R reporting, Zahn says EPA's enforcement methods and what he has found to be a lack of knowledge about the environmental reporting law among many small firms are most troubling.

Zahn says that after his case received coverage from the local news media, other small businesses in the area started calling him with questions about EPCRA. He says "there's a lot of concern" among businesses that want to comply with the law but don't want to be penalized because they found out about it late.

Zahn, who says he wasn't aware of the law in 1988 and 1989, admits that "ignorance [of the law] is no excuse, not legally. But it is an issue because of the way EPA is enforcing it so harshly." He is particularly upset that EPA "gave us every indication that everything was OK" during the March 1991 inspection and then, with no communication from the agency, fined Autosplice in December 1991. "If [EPA] cared about getting this [Form R] information, why did it walt nine months and then sue us?" Zahn asks.

As for EPA's efforts to educate companies about the environmental-reporting law, Sam Sassnett, chief of the EPA toxic-release inventory branch, says the agency did mass mailings to manufacturing firms and that EPA's 10 regional offices and state environmental agencies have "every year attempted to conduct a pretty extensive outreach effort." Still, Sassnett acknowledges that smaller facilities are the ones that typically have the most problems with the reporting law.

Joel Moskowitz, a Los Angeles lawyer who has handled cases related to the reporting law for several businesses, says the Emergency Planning and Community Right-To-Know Act is a substantial burden on small sources.

EPA estimates that compliance costs for businesses total $147 million a year. Estimates from trade organizations whose member companies are affected by the law are close to $450 million a year.

The severity of the fines for paperwork violations of the law are also of concern to industries affected by it. (EPA can impose frees of $25,000 a day per violation for failure to file Form R.)