Stericycle EPA Investigation
This case study profiles Stericycle Inc. (Stericycle), a Bannockburn, Illinois-based medical waste incinerator operator. During incineration operations, Stericycle violated the federal Clean Air Act and other laws. Stericycle permitted too much nitrous oxide to enter the atmosphere during operations. Prosecutors charged the company with CAA violations and violations of the Utah Air Quality Regulation (UAQR).
To resolve the civil lawsuit allegations, the parties entered a settlement agreement called a Consent Decree. Stericycle accepted responsibility for its Clean Air Act violations and worked with federal regulators to ensure the violations did not reoccur.
The information in this case study comes from a Department of Justice (DOJ) press release, an EPA press release, and a news article.
State of the Industry
The Environmental Protection Agency’s Clean Air Act regulates both corporate and individual output of airborne pollutants. While an altruistic goal, it proves difficult to enforce over the short term. However, the EPA’s enforcement of the Clean Air Act has a long track record of finding violations. Once located, the responsible parties receive fines, penalties, and sometimes prison sentences.
Background and Analysis
The Environmental Protection Agency (EPA) investigated Stericycle’s North Salt Lake, Utah, facility for violations of the Clean Air Act (CAA).
On its website, Stericycle styles itself as a “leading provider of compliance-based solutions that protect people and brands, promote health, and safeguard the environment.” Stericycle’s medical waste management services provide business-to-business offerings to clients in 16 countries.
The United States regulates and monitors air emissions through the Clean Air Act (CAA). Congress promulgated the CAA in 1970. Congress specifically authorized the EPA to regulate emissions of hazardous air pollutants.
According to regulators at the EPA, Stericycle’s North Salt Lake medical waste incinerator facility exceeded allowable nitrogen oxide (NOx) levels. The facility’s operation also failed to conduct stack tests properly. The EPA requires businesses to perform Stack Testing to determine a facility’s compliance with CAA emission limitations.
Stack Testing measures the performance of the facility’s “capture efficiency,” which determines whether regulated pollutants escape into the atmosphere. The EPA regulators allege Stericycle routinely failed to comply with reporting requirements.
To settle the matter, Stericycle entered into a consent decree with the government. The consent decree spared Stericycle the costs and risks of ongoing litigation. It required Stericycle to pay fines and also participate in a Supplemental Environmental Project (SEP). The SEP requires Stericycle to spend at least $2 million to purchase low-emitting school buses for a local school district.
The company agreed to:
- install new pollution controls at its North Salt Lake facility;
- make operational changes to remedy the emissions concerns;
- pay $600,000 in civil penalties;
- spend $2 million on the new school buses in the SEP;
- ongoing compliance with all applicable EPA regulations.
Stericycle’s acceptance of all terms in the consent decree, including participation in the SEP program, showed a willingness to go beyond ordinary compliance obligations in order to settle litigation.
Companies can inadvertently violate federal laws. When they do, they should cooperate with federal investigators to limit their exposure to fines, penalties, and other types of punishment. Stericycle paid hefty penalties in this case for failing to comply with federal laws. Yet by entering into a consent decree, the company avoided the risk of more onerous penalties, including a criminal indictment.
We recommend that business leaders implement a multi-pronged approach to help them avoid the fallout from government investigations. Companies should conduct a risk assessment to gauge their vulnerability to problems with regulators. Then, the company should document best practices to minimize violations of law. The company should also create robust compliance training programs.
Proper compliance training can lessen a company’s vulnerability to costly consent decrees or settlements with government agencies.
At Compliance Mitigation, each of our owners and professional staff members have personally experienced a federal investigation. We have seen the devastating effects such investigations have on people’s lives.