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EPA Issues Unprecedented Civil Enforcement Relaxation Policy Due to COVID-19

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On March 26, 2020, U.S. EPA (EPA) announced a sweeping policy for relaxation of EPA enforcement of environmental non-compliance resulting from the COVID-19 pandemic (“COVID Enforcement Policy” or “Policy”).  The Policy applies retroactively beginning on March 13, 2020.  The expansive scope of the Policy’s enforcement relaxation discretion is widely perceived as being unprecedented in EPA history.  The full text of the EPA Policy memorandum is available at: https://www.epa.gov/sites/production/files/202003/documents/oecamemooncovid19implications.pdf.

Policy “General Conditions”

If compliance is not “reasonably practicable” due to COVID-19, facilities with environmental compliance obligations should satisfy the following Policy “general conditions” in order for EPA to exercise its enforcement relaxation discretion (“General Conditions”):

  • Minimize the effects and duration of any non-compliance caused by COVID-19;
  • Identify the specific nature and dates of the non-compliance;
  • Identify how COVID-19 was the cause of the non-compliance and the decisions and actions taken in response, including “best efforts” to comply and steps taken to come into compliance at the earliest opportunity;
  • Return to compliance as soon as possible; and
  • Document the information, action, or condition specified in (1) – (4) above.

EPA expects to focus largely on situations that “may create an acute risk or imminent threat to public health or the environment”.   All ongoing enforcement matters will continue.

Primary compliance categories to which the Policy is applicable

The COVID Enforcement Policy addresses the following major compliance categories that are generally relevant to Mississippi facilities: (1) routine compliance monitoring and reporting, (2) facility operations and (3) critical infrastructure.

The Policy also addresses (1) public water systems regulated under the Safe Drinking Water System, (2) EPA settlement agreement and consent decree reporting obligation and milestones and (3) programs that EPA implements directly rather than by MDEQ.  Those portions of the Policy are not addressed in this article since they are not generally applicable to Mississippi facilities.

I. Routine compliance monitoring and reporting

EPA has determined that the COVID-19 pandemic may constrain the ability of facilities to perform the following environmental obligations:

  1. Routine compliance monitoring – including CEMS and stack tests, relative accuracy test audits, LDAR monitoring, fence line monitoring, RICE readings and monitoring, tank and piping inspections, assessments, or stormwater inspections;
  2. Integrity testing – including tank integrity testing (e.g., API 653) for compliance with certain “good air pollution control practices”;
  3. Sampling – including effluent sampling and testing, as well as cooling tower sampling;
  4. Laboratory analysis – including laboratory holding times and turn-around times;
  5. Training – including SPCC training, hazardous waste trainings, CAA section 129 renewals, and other annual re-certifications; and
  6. Reporting and certification – including reports and certifications associated with delayed activities described above, and late reports under permits or other regulatory obligations, including TRI and greenhouse gas inventory reporting.

If reporting is not “reasonably practicable” due to COVID-19, Mississippi facilities should maintain this information internally and make it available to MDEQ upon request. In general, EPA does not expect to seek penalties for violations of these obligations in situations where (1) EPA agrees that COVID-19 was the cause of the non-compliance and (2) the facility provides supporting documentation to EPA upon request.  After the Policy is no longer in effect, EPA does not plan to ask facilities to “catch-up” with missed monitoring or reporting if the underlying requirement applies to intervals of less than three months.

II. Facility operations

With regard to COVID-19 impacts on facility operations, the Policy includes the following key provisions:

  1. Facilities should contact MDEQ if facility operations impacted by the COVID-19 pandemic may create an acute risk or an imminent threat to human health or the environment. In Mississippi, EPA’s first step after this contact will be to consult with MDEQ to discuss measures to minimize or prevent the acute or imminent threat to health or the environment from the COVID-19-caused non-compliance.
  2. If a facility suffers from failure of air emission control or wastewater or waste treatment systems or other facility equipment that may result in exceedances of enforceable limitations on air emissions, water discharges, land disposal, or other unauthorized releases, the facility should notify MDEQ as quickly as possible. The notification also should include (1) information on the pollutants emitted, discharged, discarded, or released; (2) the comparison between the expected emissions or discharges, disposal, or release and any applicable limitation(s); and (3) the expected duration and timing of the exceedance(s) or releases. EPA will consult with MDEQ to determine the appropriate response.
  3. If a facility is a generator of hazardous waste and, due to disruptions caused by the COVID-19 pandemic, is unable to transfer the waste off-site within the time periods required under RCRA to maintain its generator status, the facility should continue to properly label and store such waste and comply with the Policy’s General Conditions (see above). If these steps are met, EPA will treat these facilities as “hazardous waste generators”, and not “treatment, storage and disposal” (TSD) facilities. In addition, EPA will treat “Very Small Quantity Generators” and “Small Quantity Generators” as retaining that status, even if the amount of hazardous waste stored on site exceeds a regulatory volume threshold due to the facility’s inability to arrange for shipping of hazardous waste off of the facility site due to the COVID-19 pandemic.
  4. If a facility is an animal feeding operation, and, due to disruptions caused by the COVID-19 pandemic, is unable to transfer animals off-site and, solely as a result of the pandemic, meets the regulatory definition of concentrated animal feeding operation (CAFO), EPA will not treat these animal feeding operations as CAFOs (and will also not treat small CAFOs as medium CAFOs or medium CAFOs as large CAFOs).

III. Critical infrastructure

In situations where a facility is an “essential critical infrastructure”, EPA may consider a more “tailored” short-term “No Action Assurance” if EPA determines that is in the public interest. Such determinations are made on a case-by-case basis by EPA’s Office of Enforcement and Compliance (OECA) Assistant Administrator – Susan Bodine (who issued the Policy memorandum).  EPA will consider “essential” the facilities that employ “essential critical infrastructure workers” as determined by guidance issued by the Cybersecurity and Infrastructure Security Agency.

Exclusions from the Policy

The Policy does not provide EPA compliance enforcement discretion regarding:

  • Accidental releases;
  • Criminal violations;
  • Superfund and RCRA corrective action; and
  • Imports

Policy modifications/updates and termination

EPA will assess and update the Policy as needed and post a notification at https://www.epa.gov/enforcement/enforcement-policy-guidance-publications at least seven days prior to terminating the Policy.

If you have any questions concerning the COVID Enforcement Policy or related issues, please feel free to contact John Milner at jmilner@brunini.com or at (601) 960-6842.

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U.S. Department of Labor Releases Model Posting for Families First Coronavirus Response Act

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On Wednesday, March 25, 2020, the U.S. Department of Labor (DOL) released the first version of the required notice posting that is required as part of the Families First Coronavirus Response Act (FFCRA).  You can find the current version of this poster by going to this DOL website: https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf.  While the DOL did not indicate the date by which employers would need to post this notice poster, covered employers are advised to post it by at least April 1, 2020, the effective date of the FFCRA.  Each “covered employer”—those with 500 or less employees—must post this notice of the FFCRA requirements in “a conspicuous place on its premises of the employer where notices to employees are customarily posted.”  An employer may also satisfy this requirement by emailing (or directly mailing) the notice to its employees.  An employer may also post this notice on an employee information website (such as an intranet).

At this time, Brunini’s Labor & Employment Practice Group suggests that employers wait to print out and post this material until March 31, 2020, as the DOL may issue an updated version.  If such an update is provided, the DOL should post the update in this location.

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Mississippi Commission on Environmental Quality

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Summary of Meeting Held February 27, 2020

The Mississippi Commission on Environmental Quality (“MCEQ”) convened at 9:00 a.m., on February 27, 2020, at the offices of the Mississippi Department of Environmental Quality in Jackson.  The Commission approved minutes from the previous meeting held on November 15, 2019.  Chairman, John Dane, III welcomed Chris Wells as Interim Executive Director of the Mississippi Department of Environmental Quality (“MDEQ”).  Following a prepared agenda, items considered were as follows:

FY 2021 Title V Fee Recommendation – Approval to Proceed to Public Notice of Hearing

MDEQ Staff discussed the draft report containing the Title V Advisory Council’s Title V fee recommendation for the upcoming fee year has been forwarded to the Commission. Staff requested approval to hold a public hearing to receive comments regarding the proposed fee and to proceed with public notice of the hearing. After the public participation process is completed, staff will bring the fee recommendation back before the Commission for final action. This agenda item was presented for informational purposes only.

Commission Approval of Brownfield Agreement Termination

MDEQ Staff reported that the Commission approved Brownfield Agreement 6957-19 in June 2019 between the Commission and the Military Lee, LLC for remediation of the former Lee Middle School property located in Columbus, Mississippi. The original brownfield agreement required lead paint and asbestos abatement. The completed remedial activities have met the requirements of the MDEQ-approved Corrective Action Plan dated April 2019. Military Lee, LLC has requested the Commission to make a determination as to the completion of the Brownfield Agreement. The staff recommends the completion of the Brownfield Agreement. The staff of the MCEQ has evaluated the Brownfield Agreement completion and believes that the Site is in compliance with applicable State and Federal laws and standards and will be protective of the public health and the environment. The Commission approved this termination.

Environmental Covenant for YRC Freight Facility

Pursuant to the Commission’s delegation regulations (11 Miss. Admin. Code Pt. 1, R.1.1.Y.), the Executive Director of MDEQ approved the Environmental Covenants between the Commission and YRC Inc. regarding the remediation of property located at 102 Carrier Boulevard in Richland, Mississippi. YRC is an active trucking terminal and vehicle maintenance facility. The groundwater monitoring and recovery wells have been plugged and decommissioned. The staff of the MDEQ has evaluated the proposed Environmental Covenant and believes that, with the conditions and restrictions contained within; the site will be in compliance with applicable State laws and standards and will be protective of the public health and the environment. This agenda item is for reporting purposes only.

Commission Briefing on Underground Storage Tank Regulatory Fee

Pursuant to Miss. Code Ann. Sec. 49-17-421 revised July 1, 2018, the Commission is charged by law to establish the tank regulatory fee in an amount sufficient to cover the cost of the UST Program. The owners of each underground storage tank available for use in Mississippi is required to pay MDEQ the annual tank regulatory fee. The statutory revision also created Miss. Code Ann. Sec. 49-17-422 that established an Advisory Council to conduct an independent study of the cost of the UST Program and provide the Commission a written report and recommendations on the annual tank fee. This report was provided to the Commission on December 31, 2019. Staff provided information on the report, recommendations, and the public notice for comment. This agenda item was presented for informational purposes only.

Pollution Emergency Response Regulations

Ted Lampton, MDEQ Legal Counsel reported on the Pollution Emergency Response Regulations. Pursuant to Mississippi Code Sections 17-17-29, 49-17-43, 49-17-27, and 49-17-68, persons who cause pollution or own facilities which cause pollution are liable for the cost of remedial or clean-up action resulting from such pollution. The purpose of this new regulation is to include these various sources of statutory authority for pollution emergency response and to include definitions to provide clarity and consistency in the implementation of these statutes related to emergency response requirements. If adopted by the Mississippi Commission on Environmental Quality, this regulation will be codified at Title 11, Part 9, Chapter 1 of the Mississippi Administrative Code. A public hearing on the new regulation was held on December 12, 2019. No written or verbal comments were received from the public related to the proposed regulation. A copy of the proposed regulations is included in the Commission’s packet for review prior to the Commission’s meeting on February 27th. Staff recommended and the Commission approved adoption of this new regulation.

Modification of Hinds County Solid Waste Management Plan

Ted Lampton, MDEQ Legal Counsel reported on the Modification of Hinds County Solid Waste Management Plan. An evidentiary hearing was held on September 19, 2019, regarding Commission Order No. 6772-17, which approved the modification of the Hinds County Solid Waste Management Plan to allow for the expansion of the Faircloth Class I Rubbish Site. The hearing was held before Hearing Officer Doug Levanway. Hearing Officer Levanway presented his findings of fact and recommended decision at the Commission’s November 15, 2019, meeting. In his findings and recommended decision, the Hearing Officer recommended that the Commission affirm the Order which approves the modification of the Hinds County Solid Waste Management Plan allowing for the expansion of the Faircloth Class I Rubbish Site by an additional 26.55 acres. The Commission considered the Hearing Officer’s recommended decision after reviewing the previously provided record which includes the Petition for Hearing, the transcript of the Motion Hearing, the transcript of the Evidentiary Hearing, exhibits to the transcripts (including pre-filed testimony submitted by the parties-William G. (Bill) Moore-Petitioner, Hinds County Board of Supervisors-Intervenor, Faircloth Rubbish Landfill, Inc.-Intervenor and MDEQ), Motions to Intervene, Motions in Limine, Responses to Motions, witness lists, and the Hearing Officer’s Findings of Fact and Recommended Decision. The Commission then voted to adopt the Hearing Officer’s Recommended Decision to affirm the issuance of Commission Order No. 6772-17, which approved the modification of the Hinds County Solid Waste Management Plan to allow for the expansion of the Faircloth Class I Rubbish Site. Staff will recommend that the Commission adopt an Order reflecting its previous decision in this matter which is included in the Commission’s packet for review prior to the Commission meeting on February 27th. Staff recommended and Commission approved that Interim Executive Director Chris Wells be authorized to sign the Order on behalf of the Commission.

Certifications Approved since the last report

Type Number
Asbestos Certifications 292 certifications
Lead Paint Certifications 147 certifications
Underground Storage Tanks (UST) Certifications 22 certifications to those who install, alter, or remove underground storage tanks
Wastewater Operator Certifications 70
Emergency Clean-Up Expenses 8

Administrative Orders

27 Administrative Orders and 2 Amended Agreed Orders were issued since the last report, and they will added to the minutes.

This Newsletter is a publication of the Environmental Department of the law firm of Brunini, Grantham, Grower & Hewes located in Jackson, Mississippi. This Newsletter is not designed or intended to provide legal or professional advice, as any such advice requires the consideration of the facts of the specific situation.

IRS Circular 230 Notice

To ensure compliance with requirements imposed by the IRS, we inform you that, unless specifically indicated otherwise, any tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any tax-related matter addressed herein.

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Mississippi Environmental Quality Permit Board

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The Mississippi Environmental Quality Permit Board (“Board”) convened its regular monthly meeting at 9:00 a.m. on March 10, 2020, at the offices of the Mississippi Department of Environmental Quality, in Jackson.  Chris McDonald chaired the meeting.

The Board approved minutes from the February meeting and the non-controversial actions/ certifications completed by the staff since the February meeting.

Following a prepared agenda, items considered were as follows:

OFFICE OF GEOLOGY

Ron Porter (MDEQ Office of Geology, Mining and Reclamation) presented the MDEQ Staff’s recommendations and Board approved the following:

Surface Mining Bond Releases

Permittee County Permit Staff Recommendation
Meggs Dirt & Gravel, LLC Attala P10-008 Initial 60%
Milton Chad Coffey Union P07-014T Final 80%
Milton Loper Madison P94-038 Final 10%
Milton Loper Madison P89-010 Final 90%
Milton Loper Madison P93-100 Final 10%
Joe McGee Construction Co. Madison P11-024 Final 10%
Joe McGee Construction Co. Rankin P14-022 Initial 90%

Surface Mining Permit Transfer

Permittee County Permit
Benefield Sand Company to Ripley Sand Tippah P93-059

OFFICE OF POLLUTION CONTROL

401/STORMWATER BRANCH

Belle Fontaine Subdivision, Jackson County – Consideration of Issuance of a 401 Water Quality Certification (WQC2017103).

MDEQ Staff presented to the Board and recommended approval of the above-referenced application.  Belle Fontaine Subdivision requested the permit in connection with a proposed single-family residential subdivision. MDEQ received letters of objection from adjacent property owners citing flooding, wetland impacts and endangered species issues among others; however, no one appeared at the meeting.  The Application was amended to address the concerns of the adjacent property owners.  A representative for Belle Fontaine Subdivision spoke at the meeting stating that he had met with the property owners regarding the existing flooding problems and stated that the subdivision was designed to meet 100-year flood standards and that this should solve current flooding problems with the neighbors.  The Applicants are required to purchase mitigation credits before construction.  After a question from the Board, the Board approved the Application.

Golden Bay Investments, Oak Landing RV Park (“Golden Bay”), Harrison County – Consideration of Issuance of a 401 Water Quality Certification (WQC2017056).

MDEQ Staff presented to the Board and recommended approval of the above-referenced application.  Golden Bay requested the permit in connection with a proposed upscale RV park. MDEQ received letters of objection from adjacent property owners citing drainage, flooding, wetland impacts and endangered species issues among others; however, no one appeared at the meeting.  The Application was amended to address the concerns of the adjacent property owners. A representative for Golden Bay spoke at the meeting stating that he had met with the property owners regarding the existing drainage problems and stated that the subdivision was designed to meet 100-year flood standards and that this should solve current drainage problems with the neighbors.  The Applicants are required to purchase mitigation credits before construction.  After a question from the Board, the Board approved the Application.

AIR II BRANCH

Jackson Memorial Funeral Service, LLC, Hinds County – Buffer Zone Variance Request (Air Ref. No. 1080-00264)

Staff presented but did not provide a recommendation to the Board concerning an application for buffer zone variance from 150-foot setback to the minimum setback to 110 feet for one adjoining property owner and 95 feet for another property owner.  Staff stated that contiguous land owners were contacted.  A representative from the funeral home visited with the abutting property owners regarding the variance, and the property owners stated that they have no objection to the variance.  No one in opposition appeared at the meeting.  The Board approved the variance.

Other Business

Roy Furrh, MDEQ Legal Counsel reminded the Board Members that the Evidentiary Hearing regarding Mississippi State Port Authority, North Port Property in Harrison County is scheduled for May 12, 2020.

Mr. Roy Furrh also reminded the Permit Board members that they need to complete their annual compliance forms and statement of economic interest forms and turn in their Designee Letters.

The next Permit Board meeting will be held on April 14, 2020, at 9 a.m.

This Newsletter is a publication of the Environmental Practice Group of the law firm of Brunini, Grantham, Grower & Hewes located in Jackson, Mississippi. This Newsletter is not designed or intended to provide legal or professional advice, as any such advice requires the consideration of the facts of the specific situation.

If you have any questions concerning the content of a newsletter, or if you would like further information about the matters addressed in a newsletter, please contact John Milner, the Brunini Firm Environmental Practice Group leader, at jmilner@brunini.com or (601) 960-6842.

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U.S. Department of Labor Issues First Guidance Concerning Families First Coronavirus Response Act (FFCRA)

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On Wednesday, March 18, 2020, President Trump officially signed the Families First Coronavirus Response Act (FFCRA) into law.  The text of the FFCRA provided broad details concerning its two principal mandates: (1) new, paid sick leave rights for workers impacted by COVID-19 and those serving as caregivers for others with COVID-19; and (2) new, enhanced leave entitlements under the Family Medical Leave Act (FMLA), including limited paid leave rights.  However, Congress failed to address many of the details concerning the implementation of the FFCRA, instead deferring to the Secretary of Labor.

On Tuesday, March 24, 2020, the U.S. Department of Labor (DOL) issued a series of guidance attempting to answer preliminary questions concerning the mechanics of the FFCRA.  Specifically, the DOL issued a General Question and Answer page, along with Fact Sheets for Employers and Employees.  The DOL also stated it also will be issuing implementing regulations regarding the new law in the near future, as well as additional guidance.  Of note, the DOL indicated that the FFCRA will officially go into effect on Wednesday, April 1, 2020—not on April 2nd as originally expected.

While circumstances remain fluid, we will continue to monitor further proposed legislation and its potential impact on our clients.

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Internal Revenue Service & Department of Labor Issue New Guidance on Employer Tax Credits under Families First Coronavirus Response Act

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As previously reported, President Trump signed the Families First Coronavirus Response Act (FFCRA) into law on Wednesday, March 18, 2020.  Among its provisions, the FFCRA set out several key mandates that impact employers, including:

  • New, separate paid sick leave rights for employees impacted by COVID-19 and those serving as caregivers for individuals with COVID-19; and
  • New, enhanced leave entitlements under the federal Family Medical Leave Act (“FMLA”), including paid leave under FMLA.

Since its passage, employers covered by the FFCRA—those with 500 employees or less—have expressed concerns with the FFCRA, ranging from interpretation of its exemption to financing of the new mandates.

Under the FFCRA, employers are entitled to reimbursement for up to 100% of the cost of wages for such leave, including health insurance costs in the form of payroll tax credits. The credits max out at $511 per day for employees who unable to work because they are in Coronavirus quarantine or self-quarantine or have Coronavirus symptoms and are seeking diagnosis and at $200 per day for employees who are caring for someone with Coronavirus or is caring for a child because the child’s school or child care facility is closed or provider is unavailable due to the Coronavirus.   An additional credit is available for health insurance costs for such affected employees during the time they are on leave from work.

Over the past few days, the Internal Revenue Service (IRS) and U.S. Department of Labor (DOL) each issued administrative guidance concerning the mechanics of the tax credits for small and midsized businesses to help cover the cost of providing COVID-19 related paid leave to employees. The highlights include:

  • Employers may keep, rather than deposit, the payroll taxes due in an amount equal to the employer’s cost of qualifying sick and childcare leave paid.
  • The federal government is offering a way to shorten the waiting time for employers to receive the payroll tax refund. A new refund request form is coming soon that may be filed immediately to cover employer costs of qualified sick or childcare leave if the costs exceed payroll withholdings due. Refunds should be processed within 2 weeks.
  • 30-day non-enforcement period for good faith compliance efforts.

The IRS and DOL plan to release additional information on the process for employers to receive an advance payment for the credit.  While circumstances remain fluid, we will continue to monitor further proposed legislation and its potential effects on employers.

https://www.dol.gov/newsroom/releases/osec/osec20200320

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CORONAVIRUS AND THE INTERRUPTION OF YOUR BUSINESS

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As rapidly as the coronavirus is spreading its footprint across the globe, businesses of all shapes and sizes are closing their doors … and losing income.  Unfortunately, Mississippi businesses are not exempt from this fast moving reality.  Indeed, coffee shops, boutiques, restaurants, office complexes, and a variety of other businesses across the State have been forced to drastically change their operations or, in some cases, completely shutter their businesses in response to the coronavirus pandemic and the related government directives concerning travel and social distancing.  As a result, many companies are already reporting lost profits, as well as a significant concern about the future of their businesses.

Fortunately, most companies carry a commercial property insurance policy, which typically includes not only coverage for property damage but also coverage for lost profits incurred as a result of damage to the covered property.  In other words, a business may have coverage for its coronavirus lost profits through its commercial property policy.  To know that, an insured should first review its policy to determine if it contains any of the following types of coverages which are frequently included in a commercial property policy.

Business Income/Interruption 

Business Income/Interruption Coverage provides coverage for the loss of income an insured sustains as a result of a suspension of an insured’s operations.  However, most policies require that the suspension stem from “direct physical loss or damage” caused by a “covered peril” (typically theft, fire, wind, falling objects or lightning) to the specific covered property.  This type of coverage is most commonly found in circumstances where an insured’s covered property is damaged by a fire, or perhaps a storm, forcing the insured to suspend its operations for a period of time.  In that scenario, the fire or storm damage to the subject property would be readily apparent, and assuming it is a covered peril, the claimant would have a strong claim for the income lost during the restoration period.  However, a claim for lost income as a result of the coronavirus will be much more complex.

First, an insured will need to demonstrate “direct physical loss or damage” to its covered property.  Given the nature of the coronavirus, however, there likely will be no apparent damage to the property.  So, insureds will likely contend that, regardless of its visibility or lack thereof, the virus is within their workplace – albeit at a microscopic level – and that it is has in fact damaged their covered property.

Courts have heard similar arguments in other contexts (e.g. asbestos, gasoline fumes, etc.) and reached varying conclusions.  Some have sided with the insureds that the contaminant damaged the property, while others agreed with the insurers that the contaminant had not damaged the insured’s property.  This determination, which will involve a detailed analysis of the relevant policy and applicable law, will be the critical issue in evaluating these claims for coverage.

Next, an insured should review its policy to determine if it excludes coverage for business interruption claims based on communicable diseases.  Due to the SARS outbreak in 2003, the insurance industry purportedly paid out a significant amount of claims based on “business interruptions” caused by SARS.  After the SARS outbreak, and to avoid a repeat, the insurance industry began excluding losses incurred by communicable disease.  Perhaps most importantly, in 2006, the heavily relied upon Insurance Services Office (ISO) issued form CP 01 40 07 06 excluding “loss or damage caused by or resulting from any virus, bacterium, or other microorganism that induces or is capable of inducing physical distress, illness or disease.”  Determining whether the insured’s policy contains this exclusion will be a critical component of any coverage analysis.

Contingent Business Interruption

Commercial property policies routinely include coverage for disruptions in an insured’s supply chain.  This coverage applies when damage occurs not to the insured’s property but to the property of others relied on by the insured to supply materials to the insured or its customers.  Again, it is important to note that these policies usually require damage or physical loss caused by a covered peril to the supplier’s property.  As with the Business Income/Interruption claim, the specific language of the policy will be critical in this analysis.

Order of Civil Authority

Many commercial property insurance policies provide coverage for business income losses sustained when a “civil authority” prohibits or impairs access to the policyholder’s premises.  Some of these policies do not require “physical loss” to the insured’s covered property, and those that do sometimes do not require that the physical loss occur to the insured’s own property.  Thus, if a governmental authority – federal, state, or local – prohibits or even limits access to an area including an insured’s business, the insured may have coverage for its loss of income under its “civil authority” coverage.  Yet again, analysis of the specific language in the policy and applicable law will be critical in determining coverage.

The First Coronavirus Coverage Case

On March 16, 2020, Oceana Grill in New Orleans, Louisiana filed what is thought to be the first lawsuit – of many more to come – dealing with a coronavirus business interruption coverage dispute (Cajun Conti, LLC, et al. v. Certain Underwriters at Lloyd’s London, et al., Civil District Court for the Parish of Orleans, Louisiana).

In its Petition for Declaratory Judgment, Oceana Grill requested a declaration of coverage for coronavirus-caused losses under a business interruption policy.  Oceana contends that it purchased an “all risk policy” from Lloyd’s of London, “which covers all risks unless clearly and specifically excluded” and further contends that “the policy does not provide any exclusion due to losses, business or property, from a virus or global pandemic.”

With respect to harm caused by the virus, Oceana contends that:

[T]he scientific community, and those personally affected by the virus, recognize the Coronavirus as a cause of real physical loss and damage….The virus is physically impacting public and private property, and physical spaces in cities around the world….The global pandemic is exacerbated by the fact that the deadly virus physically infects and stays on the surface of objects or materials, ‘fomites,’ for up to twenty-eight days, particularly in humid areas below eighty-four degrees….It is clear that contamination of the insured premises by the Coronavirus would be a direct physical loss needing remediation to clean the surfaces of the establishment.

Oceana also pointed out that the Louisiana Governor issued a statewide order banning gatherings of 250 or more people and the New Orleans Mayor issued additional operating restrictions on businesses.

For these reasons, Oceana has asked the Court to declare that:

  1. The policy provides coverage to Plaintiffs for any future civil authority shutdowns of restaurants in the New Orleans area due to physical loss from Coronavirus contamination; and
  2. The policy provides business income coverage in the event that the coronavirus has contaminated the insured’s premises.

This will be an important case to monitor as the coronavirus crisis and resulting business interruption coverage disputes continue.

The Brunini attorneys are closely monitoring developments in the coronavirus crisis and are counseling clients through the various legal and business issues involved in the crisis.

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President Trump Signs Revised Families First Coronavirus Response Act into Law

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On Wednesday (March 18, 2020), Congress passed a revised version of the Families First Coronavirus Response Act (“the Act”), which President Donald Trump wasted little time signing into law.  The final version of the Act mirrored much of the original version of the legislation passed by the U.S. House of Representatives on March 14, 2020, but also contained several substantive revisions.  The Act applies only to employers with fewer than 500 employees. Employers’ obligations under the Act become effective within 15 days of enactment—or on April 2, 2020—and automatically expire on December 31, 2020.

As outlined previously, the Act includes a variety of provisions, including:

  • Free COVID-19 testing
  • Multiple types of paid emergency leave
  • Enhanced unemployment insurance
  • Additional funding for nutritional programs
  • Protections for health care workers and employees responsible for cleaning at-risk places.
  • Additional federal funds for Medicaid

Among these provisions, the Act sets out several key mandates that impact employers: (1) new, separate paid sick leave rights for employees impacted by COVID-19 and those serving as caregivers for individuals with COVID-19; and (2) new, enhanced leave entitlements under the federal Family Medical Leave Act (“FMLA”), including paid leave under FMLA.

Emergency Paid Sick Leave Act

First, the Act requires employers with fewer than 500 employees to provide full-time employees (regardless of how long the employee had been employed prior to the leave) with 80 hours of paid sick leave for qualifying reasons. Part-time employees receive only the number of hours they have worked over an average two (2) week period.

The Emergency Paid Sick Leave benefits are available only to employees who are absent from work for qualified, Coronavirus-related. Specifically, to qualify for the Emergency Paid Sick Leave benefits under the Act, an employee’s leave must be for one of the following purposes:

  1. The employee is subject to a government quarantine/isolation order related to Coronavirus;
  2. The employee has been advised by a health care provider to quarantine for Coronavirus concerns;
  3. The employee is experiencing symptoms of Coronavirus and seeking a medical diagnosis;
  4. The employee is caring for an individual who is subject to an order as described above or has been advised by a health care provider as described above;
  5. The employee is caring for a son or daughter if the child’s school or place of care has been closed or the child’s child care provider is unavailable due to Coronavirus precautions; or
  6. The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

Employees who need leave to care for themselves (reasons 1-3 above) are entitled to their full regular rate of pay for the number of hours they would work per day. However, employers are now allowed to cap this amount of paid benefits at $511 per day ($5,110 aggregate) per employee. Employees who need leave to care for others—including children home from school or without childcare— (reasons 4-6 above) are entitled to only 2/3 of their regular rate of pay (or the applicable minimum wage, if greater). The amount of paid sick leave for this leave is capped at $200 per day ($2,000 aggregate) per employee.

Significantly, employers must provide these benefits in addition to any existing paid leave benefits. In other words, employees are entitled to exhaust all available emergency paid leave provided by this Act before they are required to use any otherwise available leave benefits their employer may offer.

The Act does not address employers’ right to request certification or documentation from employees in need of leave, or how the 500 employee threshold is determined. Many anticipate that the Department of Labor will issue regulations addressing these issue at a later time.

Emergency Family Medical Leave Expansion Act

The Act also significantly amends and expands FMLA on a temporary basis.  This FMLA expansion covers all employers with fewer than 500 employees—not just employers of 50 or more employees. It also lowers the eligibility threshold to employees who have worked for only 30 days (or more).  As a result, thousands of employers not previously subject to the FMLA may be required to provide job-protected leave to employees for a COVID-19 coronavirus-designated reason.

The Act now includes language allowing the Secretary of Labor to exclude “healthcare providers and emergency responders” from the definition of employees who are allowed to take such leave—although these terms themselves remain undefined.  The Act also allows the Labor Department to exempt small businesses with fewer than 50 employees, if the required leave would jeopardize the viability of their business.

Any individual employed by the employer for at least 30 days (before the first day of leave) may take up to 12 weeks of job-protected leave to allow an employee (who is unable to work or telework) to care for the employee’s child (under 18 years of age), if the child’s school or place of care is closed or the childcare provider is unavailable due to a public health emergency. Under the final version of the Act, this is now the only qualifying basis for Coronavirus-related FMLA leave, and represents a significant departure from the original version passed by the House (which contained several other COVID-19-related reasons to provide Emergency FMLA).

Employers may provide the first 10 days of this leave without pay. While employees can elect to substitute or use otherwise accrued paid leave during these initial 10 days, employers may not require employees to do so, no matter how their policies may read. Employees could elect to use their paid sick leave provided by the Emergency Paid Sick Leave Act (see above) for this time to be paid. After this initial 10-day period, employers must provide additional paid leave to their employees for the remaining 10 weeks, but only at two-thirds of the employee’s regular rate of pay for the number of hours the employee would normally be scheduled to work. The amount of pay during these 10 weeks is capped at $200 per day ($10,000 aggregate) per employee.

Employees are required to give their employers “as much notice as practicable” when this type of leave is foreseeable.  Like the Emergency Paid Sick Leave portion of the Act, the FMLA Expansion does not include any reference to an employer’s right to request certification or documentation of an employee’s need for leave.  Many anticipate that the Department of Labor will issue regulations addressing these issues at a later time.

Employers must also remain aware that the Act’s paid-leave obligations are supplemental to existing federal employee leave laws. Employers are still bound by traditional FMLA, FLSA and ADA analyses for employees. For example, although an employee diagnosed with COVID-19 may not qualify for paid leave under the Act’s expanded FMLA paid leave, that same employee may have a “serious health condition” under traditional FMLA analysis, which would entitle the employee to unpaid, job-protected leave.

Lastly, employers with 25 or more employees will have the same obligation as under traditional FMLA to return any employee who has taken Emergency FMLA to the same or equivalent position upon the return to work. Conversely, employers with fewer than 25 employees are generally excluded from this requirement if the employee’s position no longer exists due to an economic downtown or other circumstances caused by a public health emergency during the period of Emergency FMLA. This exclusion is subject to the employer making reasonable attempts to return the employee to an equivalent position and requires an employer to make efforts to return the employee to work for up to a year following the employee’s leave.

Employer Tax Credits

Many small-business owners are worried about how to pay for these benefits, especially at a time when business across numerous industries has basically come to a halt. The Act aims to defray these costs for employers through a tax credit.  In order to mitigate the cost of the Paid Sick Leave mandate, the Act grants to employers a credit against their federal payroll tax obligations (the 6.2 percent tax employers pay on each employee’s salary) equal to 100% of the cost of up to 10 days of Paid Sick Leave, subject to a maximum daily rate of $511 for each employee that is directly impacted by COVID-19 or $200 per day for each employee that is caring for a family member impacted by COVID-19 or a child whose school is closed or for whom childcare is unavailable due to COVID-19.  If the amount of the allowable credit exceeds the employer’s payroll tax liability, the U.S. Government will refund the excess amount back to the employer.

Employers are also entitled to a refundable payroll tax credit for 100% of the cost of wages for Paid Family & Medical Leave subject to maximum amounts of $200 per day per employee and $10,000 in the aggregate for all calendar quarters.  In addition, employers are entitled to a credit for an allocable share of the costs of providing group health plan coverage associated with such wages.  Self-employed individuals are granted a similar refundable credit against their federal income tax liability based upon their average daily self-employment income, subject to the same $511 and $200 daily limits that apply to Paid Sick Leave.

What Does This Mean For Your Business?

For employers with fewer than 500 employees, the Act obviously imposes new paid-leave requirements for certain employees. Although larger employers are not bound by the legal obligations set forth in this legislation, they should become familiar with the terms of this law to assist in formulating voluntary, temporary internal policies and answering questions from employees. It is also possible that legislation impacting larger employers will follow.

Employers must view these new paid leave obligations in conjunction with existing federal, state, and local leave laws when examining their employees’ rights to protected leave. While circumstances remain fluid, we will continue to monitor further proposed legislation and its potential effects on employers.

A Message from Brunini to our Clients and Friends (COVID-19)

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As we all work to address the growing personal and business challenges presented by COVID-19, Brunini wants to assure our clients, friends, and the public that we will continue providing top-notch legal services uninterrupted by the ongoing public health crisis.  The firm activated its business continuity policies and procedures some time ago, and we are taking every precaution possible to protect the health, safety and welfare of our clients, the entire Brunini Team and their families.  Among other protective measures:

  • Brunini lawyers and staff may work remotely and securely, as may be needed for each individuals’ circumstances, to ensure we continue to serve our clients’ legal needs without interruption;
  • Brunini has implemented enhanced cleaning efforts to protect our lawyers, staff, clients and families, and encourages safe practices and hygiene to minimize the person to person spread of the coronavirus;
  • For some time Brunini has limited non-essential travel of its lawyers and staff, and has established procedures for employees to self-monitor and self-quarantine in the event of potential exposure in high-risk areas; and
  • Brunini encourages social distancing in our practice, including promoting the use of remote meeting technology to help our lawyers and clients avoid unnecessary exposure to potential risks, and we are prepared to adjust our means of communicating as may be needed to suit clients’ specific needs and capabilities.

We recognize that our clients, friends, and the public are being impacted by this challenging public health crisis and are dealing with many difficult and novel business issues.  We are here to help with employment concerns, tax issues, insurance coverage questions or any other legal assistance you might need.  Contact information is available on our website (www.brunini.com), or you may call (601)948-3101 for assistance in reaching any member of our team.

Mississippi Commission on Environmental Quality – Summary of Meeting Held November 15, 2019

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The Mississippi Commission on Environmental Quality (“MCEQ”) convened at 9:00 a.m., on November 15, 2019, at the offices of the Mississippi Department of Environmental Quality in Jackson.  The Commission approved minutes from the previous meeting held on August 22, 2019.  Following a prepared agenda, items considered were as follows:

 

Establishment of the Lignite Mining Fee for Liberty Fuels Company, LLC for the Liberty Mine in Kemper County for State Fiscal Year 2020;

Establishment of the Lignite Fee for the Mississippi Lignite Mining Company for the Red Hills Mine in Choctaw County for State Fiscal Year 2020;

Establishment of the Lignite Fee for the Mississippi Lignite Mining Company for the Red Hills Mine Area 3 in Choctaw County for State Fiscal Year 2020

 

MDEQ Staff recommended and the Commission approved that (1) the Liberty Fuels Company, LLC Lignite Mining Fee for the 2020 state fiscal year be set at $125,000, which is the same as for state fiscal year 2019; (2)  the Mississippi Lignite Mining Company Lignite Mining Fee for the 2020 state fiscal year be set at $125,000, which is a decrease of $50,000 from the fee for state fiscal year 2019; and (3) a new Lignite Mining Fee of $50,000 for the proposed Mississippi Lignite Mining Company, Red Hills Mine Area. This fee is necessary to cover the additional staff resources/costs associated with an application review related to a new surface coal mining application. These amounts will cover approximately 50% of the anticipated costs of administering the federally-approved coal mining program in Mississippi; the remaining approximately 50% of the cost will be covered by a federal Office of Surface Mining Reclamation and Enforcement (“OSMRE”) grant. These fees will cover 100% of the anticipated cost of administering the program above the amount of the federal OSMRE grant.

 

 

Commission Approval of Brownfield Agreement

 

MDEQ Staff recommended and the Commission approved the Brownfield Agreement between the Commission and Everest, LLC regarding the remediation of brownfield property located at 800 Central Street in Water Valley, Mississippi. The administrative record for this environmental response project is referred to as the former Water Valley Manufacturing site. The proposed Brownfield Agreement Site previously operated as a textile manufacturer. Assessments have detected the presence of chlorinated solvents in the groundwater beneath the site and asbestos containing material within onsite structures. Therefore, remediation of the proposed Brownfield Agreement Site is necessary. The proposed use of the Site after completion of all remediation will be a school as an expansion site for the Base Camp Coding Academy. The staff of the MDEQ has evaluated the Brownfield Agreement and believes that, with the conditions and restrictions contained within the Brownfield Agreement, the Site will be in compliance with applicable State and Federal laws and standards and will be protective of the public health and the environment.

Triennial Review of Mississippi’s Water Quality Standards (WQS): Revising Waterbody Classifications for Mississippi’s Surface Waters

 

MDEQ Staff provided an overview of the three new proposed waterbody classifications. Waterbody classifications are one of the required components within the state’s WQS regulations. These classifications describe the goals or expectations of a waterbody based on how that waterbody is used. Mississippi’s current waterbody classifications include Fish and Wildlife Support, Recreation, Public Water Supply, Shellfish Harvesting, and Ephemeral Waters. In an effort to more accurately characterize the waterbodies within the State of Mississippi, three additional classifications have been developed for addition to the state’s WQS as part of the current triennial review.  They are (1) Fish and Wildlife Modified; (2) Drainage Waters; and (3) Outstanding Mississippi Waters. The addition of these new proposed classifications will allow MDEQ to more accurately categorize our state waters and set appropriate goals for restoration and/or protection of these resources.  The next steps include a comment period beginning in January with a public hearing to be held after the comment period has ended.  This will then be submitted to EPA after the required comment period, public hearing and Commission approval. This agenda item was presented for informational purposes only.

 

Modification of Hinds County Solid Waste Management Plan

 

The Commission’s designated Hearing Officer, Doug Levanway presented his Recommendations related to the evidentiary hearing which was held on September 19, 2019, regarding a challenge to Commission Order No. 6772-17 to approve the modification of the Hinds County Solid Waste Management Plan to allow for the expansion of the Faircloth Class I Rubbish Site. The evidentiary hearing was held along with a Motion hearing which was held on September 16, 2019. Pursuant to Miss. Code Ann. Section 49-17-33, the Hearing Officer has the authority to conduct the hearings in the name of the Commission and provide findings of fact and a recommended decision for the Commission’s consideration at the Commission meeting. At the evidentiary hearing, MDEQ staff recommended that Commission Order No. 6772-17 be affirmed. In his findings and recommended decision, the Hearing Officer recommended that the Commission affirm the Order which approves the modification of the Hinds County Solid Waste Management Plan allowing for the expansion of the Faircloth Class I Rubbish Site by an additional 26.55 acres. The Commission affirmed the final decision in this matter after reviewing the provided record which includes the Petition for Hearing, the transcript of the Motion Hearing, the transcript of the Evidentiary Hearing, exhibits to the transcripts, Motions to Intervene, Motions in Limine, Responses to Motions, witness lists, and the Hearing Officer’s Findings of Fact and Recommended Decision. Petitioner Bill Moore and the intervenors (Hinds County and Faircloth Rubbish Landfill, Inc.) were invited to attend the meeting on November 15, 2019, but the record in this matter is closed.

 

Certifications Approved since the last report

 

Type Number
Asbestos Certifications 516 certifications
Lead Paint Certifications 286 certifications
Underground Storage Tanks (UST) Certifications 19 certifications to those who install, alter, or remove underground storage tanks
Wastewater Operator Certifications 126
Emergency Clean-Up Expenses 19

 

Administrative Orders

 

45 Administrative Orders and 2 Amended Agreed Orders were issued since the last report, and they will added to the minutes.

 

OTHER BUSINESS – Gary Rikard, MDEQ Executive Director noted that the next Commission meeting is scheduled for December 26, 2019.  Although the Commission approved that date, it is likely that the Commission will not meet on that date.

 

 

This Newsletter is a publication of the Environmental Department of the law firm of Brunini, Grantham, Grower & Hewes located in Jackson, Mississippi. This Newsletter is not designed or intended to provide legal or professional advice, as any such advice requires the consideration of the facts of the specific situation.

 

IRS Circular 230 Notice

To ensure compliance with requirements imposed by the IRS, we inform you that, unless specifically indicated otherwise, any tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any tax-related matter addressed herein.

 

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