Culture of Compliance

Keeping an ethanol plant in compliance with environmental rules and regulations isn’t just a one-person job.
By Holly Jessen | June 26, 2013

Most ethanol plants employ one or possibly two individuals charged with making sure the facility stays up-to-date with all permitting and reporting requirements. Considering the sheer amount of work involved and the fact that an environmental manager’s job description typically also includes safety management duties, it’s crucial that the department receives the full support and assistance of everyone, from top management on down to employees working in the plant itself. 

“Everybody at the plant, especially the executives, need to understand these complex requirements and the ramifications of not complying,” says Jessica Karras-Bailey, principal with RTP Environmental Associates Inc., which helps ethanol plants obtain environmental permits and maintain compliance. “In order to comply, it takes more than one or two people doing record keeping to make that happen.” 

M. Annie Mullin, partner in the law firm Schiff Hardin LLP, agrees. Schiff Hardin LLP is a general practice law firm that counts ethanol producers among its clients, helping facilities set up compliance programs, primarily regarding the Clean Air Act, and respond to information requests or notices of violation from the U.S. EPA. Mullin also stressed the importance of a top-down focus on environmental compliance.  “Starting at the board of director, plant manager level, the folks at the top need to create a culture of compliance,” she says.  

Obviously, staying in compliance is about avoiding fines, which can be hefty. Karras-Bailey also talks about the multiple benefits ethanol plants can reap from an environmental compliance program that’s coordinated and team-based. For one thing, it increases system efficiency while reducing staff stress level, she said. Another benefit is that the facility is always prepared for agency inspections. A company with a solid environmental compliance plan can quickly and easily access requested records, even if the environmental manager happens to be on vacation. That can go a long way toward developing a positive relationship with environmental agencies, she said. In order to accomplish this, ethanol plants need to practice “good housekeeping” in its record keeping, she says. 

Mullin talks about the same issue by saying it’s actually fairly common for clients to tell her they know they completed certain required records, but they are unable to locate the piece of paper that is the only proof of that. She tells a story of one ethanol plant that couldn’t find manually completed paper records of baghouse inspections because they were accidentally thrown out. In this case, the problem was discovered after an EPA inspection.  The facility admitted its mistake and fixed the problem by switching to an automated system and, as a result, wasn’t fined. “It resulted in more consistent compliance and also a way to demonstrate compliance,” Mullin says.  

Another bonus is that, by maintaining excellent records, companies can identify and correct possible deficiencies before it’s in hot water with the EPA or a state agency.  “Having a compliance system doesn’t mean you will never have deviation, but when do you find out about that development?” asks Karras-Bailey. “Did you know within a day or two of it occurring?”

This puts the company in a better position to take advantage of voluntary disclosure programs, she adds, telling of an ethanol plant that missed filing a required report. In the end, the company wasn’t fined because it self-reported the problem, along with a description of the corrective action it planned to take to avoid future issues. “From a negotiation standpoint, you are in a better position if you figure out you’ve made a mistake, or there has been an oversight, and you contact the agency versus the agency coming in and doing an inspection and finding all the things you didn’t do right,” she says. 

Another key point is the importance of honesty. Mullin says she sees it all too often—someone responsible for recording something for a required report, such as a scrubber water pressure reading, forgets to do it and then falsely fills it in later. That kind of thing often comes out eventually and results in a big problem for the company. In contrast, a company that simply admits that one or two records are missing on its quarterly report might only receive a small fine or no fine at all.  “If you send in a quarterly report that says we did everything perfectly, that sometimes is more suspicious than one that indicates occasional human failure,” she says. 

A good compliance program can also have financial benefits, although actual numbers are difficult to quantify. A facility with a positive relationship with environmental agencies as well as the community it is located in can achieve permit approvals faster and easier than one that has a history of violations, Karras-Bailey says. For example, say an ethanol plant wants to modify its permit to increase its ethanol production levels. A facility that has angered its local community may find the process slowed down during the required 30-day public notice period, when community members have the opportunity to comment. A three-month permitting process could be increased to six or nine months, during which the facility won’t be able to hit the desired increased production level. 

Top-down Priority 
So why can’t a plant’s board of directors or general manager simply hire a good environmental manager and leave the details to that person? There are multiple reasons, Mullin and Karras-Bailey say. One is that the environmental manager may compile the required paperwork but it’s a member of the management team that signs it. With their signature they are certifying that they have determined everything in the report is correct and that they have conducted a reasonable inquiry into making sure that is true. “In other words, the plant manager can’t just look at the environmental guy and say, ‘Is everything correct?’ and the environmental guy says, ‘Yes,’” Mullin says. “They need to actually dig down into the details and actually do an inquiry into whether everything is right.” If it’s later proven that the manager didn’t actually do this, it can result in criminal penalties. “Most things that a plant manager does can’t land them in an orange suit, but this is one thing that can,” she adds.  

Karras-Bailey shared the way this is worded on documents from the Minnesota Pollution Control Agency. “I certify under penalty of law that I have reviewed this facility’s compliance status with respect to all permit conditions for the above specified calendar year,” it says. “I have determined, to the best of my knowledge, that this facility has been in continuous compliance with all permit conditions with the exception of those requirements listed in the above deviations report(s).” 

This is why both women recommend management takes the time for a thorough review of all elements of the facility’s environmental compliance program. Karras-Bailey says managers need to know what to expect. A good place to start is to compile a master list of permits, with a daily, weekly, monthly and yearly schedule of what compliance activities are required. Keep in mind that some activities, such as review of a water permit, need only take place every four or five years, she adds. 

Mullin recommends that the relevant people sit down together and go through the facility’s permits. The goal should be to determine how the company will comply with the various requirements, including identifying what employee is responsible for what and who is that employee’s supervisor. It’s OK to have a lawyer or environmental consultant in the room, she says, but she doesn’t recommend simply hiring someone to implement environmental compliance systems. In the end, management may not understand the system, which is crucial in helping them avoid possible future criminal penalties. She adds that most of the managers she has met are very nervous about signing their names to these documents. Going through this process helps them feel more confident. 

Another reason management must understand and be involved in the compliance program is to demonstrate to all employees the appropriate priority level for these activities. The reality is that there are simply too many compliance duties for one person to keep up with on a day-to-day basis. Realistically, the environmental manager typically relies on plant-level employees to take readings and submit data, Karras-Bailey says. For example, daily baghouse compliance activities, which include recording the results of a visual inspection, may be completed by employees in grain receiving. As a result, the environmental manager is dependent on those employees to complete and turn in the data. Karras-Bailey has worked with environmental managers who ask her what to do when they aren’t getting the information they need after repeated requests. Ultimately, it comes down to lead by example. “[Management] needs to make sure environmental compliance is important, enough that the environmental manager is getting the support that they need,” she says. 

A good place to start is to have the environmental manager sit in on weekly operations meetings. One benefit is that she or he will be involved from day one if the plant is considering implementing new technology, which could require permit modifications, Karras-Bailey says. That will lead to a better-informed discussion and possibly shortened permitting time. Mullins recommends that environmental compliance become a standard part of all employee evaluations, from management level down to plant employees. “That’s one mechanism to make everyone in the plant aware of environmental compliance and accountable,” she says. 

Both women have heard employees complaining that they shouldn’t have to do certain compliance activities or that the requirements just don’t seem reasonable. What it boils down to, however, is that the requirements are part of the permit and without that permit the facility cannot continue to operate. That’s why proper training is very important, including telling employees why they are required to do something, not just that they must do it. “I find that message can be really effective with people, if they understand why they are doing it,” Mullin says. 

In fact, every single ethanol plant employee should pay attention to what’s happening and speak up when there could be a problem, Karras-Bailey says. She told of visiting an ethanol plant and every single person smiled at her or gave her a friendly greeting but not one person inquired who she was, why she was there or directed her to the front office. Although she was there for a reason, ethanol plant employees should know that random visitors aren’t allowed to just enter an industrial facility whenever they want. Another example she gave was of a solvent spill of less than a gallon that an employee reported to the EPA. It’s always a good idea to report spills, of course, but if that employee had known what the chain of command was and reported it internally first, he or she would have found it that it wasn’t necessary to report that small spill to the EPA. “They need to have that bigger picture understanding,” she says. 

Author: Holly Jessen
Managing Editor, Ethanol Producer Magazine