$20 Million TSCA/Lead-Based Paint Penalty: Expensive Reminder to Manage and Audit Contractors’ Joint Regulatory Liabilities
Renovation of homes built before 1978 frequently disturbs lead-based paint (LBP) and poses significant health risks, particularly for children. For this reason, companies that perform or subcontract renovation services are required to provide very specific, written LBP warnings and education materials to residents. Failure to comply with these obligations can result in significant penalties for non-compliance. The U.S. Environmental Protection Agency (EPA) enforces these rules on all companies that “perform renovations for compensation.” This means that retail sellers of renovation products (e.g., windows or woodwork) can face EPA enforcement for noncompliance even where they subcontract installation to third parties.
On Dec. 17, U.S. EPA and the Department of Justice (DOJ) announced a nationwide settlement with Home Depot related to home renovations that occurred between 2013 and 2019. The settlement resolves alleged violations of the EPA’s Lead Renovation, Repair, and Painting (RRP) Rule involving renovations performed by Home Depot’s contractors across the country on homes built before 1978. EPA identified hundreds of instances in which Home Depot failed to contract renovations or repairs with certified contractors, as well as instances in which Home Depot failed to establish, retain, or provide the required documentation to demonstrate compliance with the RRP Rule.
EPA’s proposed settlement with Home Depot includes a $20.75 million penalty—the largest such penalty to-date under the Toxic Substances Control Act (TSCA).
Companies in the construction industry and beyond can learn several significant lessons from the Home Depot violations, including the importance of:
- Understanding Your Liability: Businesses sub-contracting regulated activities to third parties are not necessarily insulated from liability. Here, since Home Depot contracted with customers and received compensation to perform renovations of pre-1978 housing, it remained liable under the RRP Rule, regardless of its use of subcontractors. Home Depot failed to actively assess and control risk from noncompliance by itself and its subcontractors, resulting in a significant penalty. Understanding your liability, particularly in the context of subcontracting, is an important step towards reducing enforcement exposure for your business.
- Being Proactive about Compliance: Another important step to reducing your enforcement exposure is implementing a compliance management system to identify potential issues before they become a problem. A strategic option to reduce such exposure can be the use of environmental self-audit/self-disclosure programs, such as EPA’s Audit Policy. The EPA Audit Policy allows companies to reduce or eliminate penalty exposure from noncompliance at their facilities. In addition, under the LBP Consolidated Enforcement Response and Penalty Policy, renovators may succeed in receiving gravity-based penalty reduction for any RRP Rule violations that qualify for such reduction under EPA’s Audit Policy. While navigating the EPA self-audit program can be challenging, the benefits can often be great for businesses. Small businesses and new business owners, in particular, may wish to take advantage of the tailored incentives potentially available to them, including the ability for new owners to enter into audit agreements with EPA to receive affirmative resolution and negotiated timelines for completing corrective actions.
Clark Hill’s EENR attorneys develop options and execute strategies for achieving environmental compliance, including negotiating audit agreements with EPA on behalf of clients. Please contact our Environment, Energy, and Natural Resources Practice Leaders to learn more.
2024 Cybersecurity and Data Privacy Laws Summit Chicago
This event will include a panel discussion with expert industry leaders, offering a deep dive into the most pressing issues and advancements in AI and data privacy laws. You’ll gain critical knowledge and explore the implications of AI in legal and privacy domains so you can update your practices to reflect the highest standards of data stewardship.
WEBINAR: The Race to 2024: Politics and Social Media in the Workplace and Employer Rights.
Over the last several years, employers have seen and continue to see increased political activities from their employees at work and on social media platforms, including on business-related social media platforms, like LinkedIn. Managing employee expression causes unique challenges for employers and HR professionals, and in a General Election year, these challenges are likely to increase as the Presidential race, and other races, heat up.
Webinar: A Cookieless Future and Promise of PETs: A Primer on Privacy Enhancing Technologies
This webinar will explore PETs – we will define what they are, what problems PETs exist to address, and emerging PET standards including the National Institute of Standards and Technology (NIST) draft guidance on how to evaluate PET effectiveness. We will provide specific PET use cases and discuss how PETs may be utilized to address the phase out of third party cookies by certain browsers for purposes of targeted advertising.