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GCI TECH NOTES©

Volume 11, Number 4           A Gossman Consulting, Inc. Publication       April 2006

Liabilities and the use of alternate fuels and raw materials (AFR) seem to go together.  Think of the examples you may be aware of – PCBs in sand, dioxins in alumina, lead in sand, dangerous polymerization and explosions with hazardous waste fuel, waste oil with PCBs, and alternative raw materials with dioxin precursors.  All of these are real examples of what has happened in the industry.  With the push for sustainable development and the associated use of alternative fuels and raw materials how can someone in corporate management or as corporate legal counsel make certain that these liabilities don’t more than offset the cost savings and profitability of such initiatives?

There are steps that can be done to control liabilities and insure that AFR programs remain profitable and productive.  The first step is to make sure that there is a quality control program for the AFR materials that looks at all potential issues.  Protection of the process, the environment and human health and safety are all critical objectives of a good quality control program.  Too often a program only focuses on one of those objectives.  Another important aspect of an AFR program is to never test after the fact.  In other words, if you cannot test before the material is unloaded and used then don’t test.  Testing after the fact is a sure way to increase liabilities rather than decrease them.  The only testing that could be done after the fact is one that you are certain to pass – and then why bother with the cost of the testing? It is also important that any quality control program have a certain level of independence and QA/QC oversight.  Supplier performed testing should not be the only level of quality control and any supplier performed testing should be carefully audited.  Set up a series of reviews by key operations, compliance, technical, and health and safety staff for each new source of AFR being considered.  It is extremely unusual that any one person can cover all these issues.

Audits are another valuable source of information for controlling liabilities but need to be carefully performed with the protection of attorney client privilege and minimal documentation.  Audits should not be just for regulatory issues but should cover the full range of liability control measures described in this publication.  Make sure that the outside agent performing the audit has the necessary operational experience to go beyond a basic regulatory audit.  Ask yourself if the expert has the needed technical and scientific background to really understand all the potential technical issues that may come to light as well as the experience to suggest solutions.

As facility engineering and quality control systems are put in place for an AFR project make certain that the management and staff have the full range of technical expertise to handle the project and deal with the contingencies.  If internal staff does not have the full range of expertise get an outside expert to guide those parts of the programs where there is a need.  It certainly does not hurt and many times provides significant cost savings to have an outside expert work with internal technical staff and mangers.

Regulatory compliance can be an enormous barrier to setting up AFR programs.  At the same time a well-designed permit can actually promote AFR at a plant.  Environmental permitting staff needs to be fully aware of all of the technical and operational aspects that the permit can impact.  Many times a well-crafted quality control program can be the real selling point for an AFR program with agency personnel.  Once permitted it is then critical that the program comply with all aspects of the permit and permit application to assure compliance.  Both internal and external audits performed under the direction of counsel can aid in this compliance effort and minimize the liability of fines and enforcement actions.

The chemical industry has established system analyses for new projects and changes to existing plants designed to look for and control liabilities.  These systems are frequently referred to as HAZOPs or a hazardous operations review.  EPA requires hazardous operations reviews for facilities handling threshold quantities of certain very hazardous materials.  Almost any industrial operation can benefit from such reviews.  These  reviews can be done for both operations before and after they are built and operational and should be repeated periodically, especially whenever there are changes.  If performed for the first time on an existing facility consider having the work done under the direction of counsel in order to protect the results with attorney client privilege.  While these reviews are typically done by an internal design and operations team it can help a great deal to include an outside expert familiar with and capable of guiding the process.

Finally, make sure that all operations involving AFR materials include documented personnel training programs and standard operating procedures (SOPs).  Don’t forget to include plant management, environmental staff and lab personnel in this training.  These training programs and SOPs should be part of what is reviewed in detail during any audit, HAZOP or hazardous operations review.

Please contact David Gossman at 847-683-4188 or by e-mail at dgossman@gcisolutions.com for additional information.