New EPA Guidelines: Property Management Companies Are Now Subject to the Renovation, Repair and Lead Painting Rule – Environment

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The EPA recently announced that the Agency will more broadly interpret the applicability of the Toxic Substances Control Act (TSCA) rule to Lead Renovation, Repair and Paint (RRP). The RRP Rule establishes training, certification, disclosure and work practice requirements for companies that “perform, propose or claim to perform” renovation, repair and painting projects that disrupt painting lead-based in homes, day care centers and pre-schools built before 1978.1 The EPA intends to hold property management companies (PMCs) liable for successful contractors who renovate or repair pre-1978 properties managed by PMCs. The liability of the RRP rule can be significant. PMCs should review their compliance programs and consider updates.

NEW EPA GUIDELINES

To help implement the RRP rule, the EPA issued non-binding guidelines via Frequently Asked Questions (FAQs) on March 22, 2018.2 On November 4, 2021, the EPA published a notice in the Federal Register. This announced EPA’s intention to withdraw two FAQs regarding PMC’s compliance responsibilities under the RRP rule.3

REMOVED FAQs:4

  • Questions (23002-13650). A property management company performs most of the office functions of the business and hires plumbers, electricians, carpenters, etc., for its renovation needs. Does property management company need firm certification?
    • A property management company acts as an agent for the owner and has the same responsibilities as the owner under the RRP rule. Therefore, if the property management company uses its own employees to carry out the work, the property management company must be a licensed business and one of the employees must be a licensed renovator. If the property management company hires a renovation company to carry out the renovation, the property management company does not need company or renovator certification, but the company that the property management company hires must be certified and must perform the renovation using a Certified Renovator who directs and provides on-the-job training to all workers who are not Certified Renovators.

  • Issues (23002-18348). If a property management company hires a certified company to carry out a renovation and the company violates the RRP rule, for example, by failing to distribute the necessary materials or to keep appropriate records, which entity is subject to enforcement measures? execution, the property manager or solidify it?
    • It is the responsibility of the certified company to comply with the requirements of the RRP rule, and any enforcement action taken would be against the company.

The EPA received public comments from six commenters on the notice. EPA concluded that the comments did not identify information that changed the Agency’s decision to withdraw the FAQs.5 EPA Administrator Michael Regan endorsed the recommendation to remove the FAQ in a memorandum dated January 11, 2022.6 The withdrawal is effective March 21, 2022.

EPA RATIONALE FOR REMOVAL OF FAQ

In the Federal Register notice dated November 4, 2021, the EPA explained its reason for removing the FAQ. The EPA based its decision on its practical experience implementing the RRP rule since the rule was originally published in 2010.seven The EPA found that at the time the FAQ was written, the EPA “did not believe that a PMC who hired a retrofit company to do a retrofit would do the work themselves in such a way that they would perform or would also offer to do the retrofit for a fee. Therefore, the EPA did not believe that the PMC would need to comply with the RRP rule and should be a certified company.”8

Since the publication of the FAQ, the EPA has expanded its understanding of the different levels of PMC involvement in retrofit projects. The EPA proposed: “In some cases, the PMC might offer to perform renovation, repair, or painting activities as part of its contractual agreements with the building owner, and in other cases the PMC could carry out an element of the renovation for a fee.”

The EPA has expanded its interpretation of “offer of performance” and “affirmation of performance”9 encompass actions such as:

  • Solicit and evaluate bids from contractors;

  • Apply for permits, where applicable;

  • Grant entrepreneurs access to property;

  • Supervise the work of the contractor on the property;

  • Inform tenants of the renovation activity;

  • Check the completion of the renovation activity; Where

  • Release of payment to contractors.

EFFECT OF REMOVAL OF THE FAQ

The practical effect of removing the FAQ is that, under EPA guidelines, PMCs are now required to obtain certification as a renovation company.ten With this certification attaches additional responsibilities. These include ensuring that renovations are carried out by certified renovators and properly trained employees, keeping certain records required by the RRP rule, retraining and recertifying a renovator, and more.11

Importantly, the EPA has also stated its intent to “hold PMCs and the contractors they hire accountable for compliance if circumstances indicate that both entities have performed or proposed to perform retrofits” under of the RRP rule.12 Under TSCA, the EPA retains broad authority to assess civil and criminal penalties for violations of the RRP rule.13 For example, penalties for failing to keep required documents reach $40,576 per violation, per day.14 “Knowledge of Violations” may result in criminal penalties of up to $50,000 per violation per day, or imprisonment for up to one year, or both, in addition to or in lieu of civil penalties .15

EPA’s broad reading of the RRP rule and its expressed interest in making larger, more capitalized companies like PMCs responsible for small contractor compliance reflects EPA’s attempt to expand the rule’s applicability. RRP via guidance rather than legally enforceable regulatory changes to the RRR rule.

KEY POINTS TO REMEMBER

  • The new EPA guidance states that “EPA plans to hold PMCs and the contractors they hire accountable for compliance if circumstances indicate that both entities have performed or offered to perform retrofits for hire in target dwellings or facilities occupied by children”.16

  • Property management companies should review their compliance programs, including to ensure consistency with standards set by the EPA and DOJ in past RRP enforcement actions.

Footnotes

1See in general 40 CFR §§ 745.80 – 745.92; see also https://www.epa.gov/lead/lead-renovation-repair-and-painting-program-rules

2EPA Lead-Based Paint Program Frequently Asked Questions (March 22, 2018) https://www.epa.gov/sites/default/files/2018-03/documents/full_rrp_fqs_march_22_2018.pdf

3EPA press release, EPA will hold building managers accountable for lead-based paint safety requirements(November 4, 2021) https://www.epa.gov/newsreleases/epa-hold-building-managers-responsible-lead-based-paint-safety-requirements. See also 86 FR 60812, https://www.federalregister.gov/documents/2021/11/04/2021-24010/withdrawal-of-two-answers-to-frequent-questions-about-property-management-companies-and- the-toxic

4 Supra footnote 2.

5EPA Memorandum, Review of public comments on the removal of two answers to frequently asked questions

Questions about property management companies and the Toxic Substances Control Act

Rule for renovation, repair and painting of lead-based paint(January 5, 2022) https://www.epa.gov/system/files/documents/2022-01/oeca-22-000-1701.pdf

6ID.

786 FR 60812, https://www.federalregister.gov/documents/2021/11/04/2021-24010/withdrawal-of-two-answers-to-frequent-questions-about-property-management-companies-and- the-toxic.

8ID.

9Identifier. “When a PMC engages a company for renovation, repair or painting activities, the PMC, as part of the business relationship with the owner, is generally compensated for the management of certain activities that are necessary or even essential to the execution of the renovation, repair or painting activity[.]”

10 EPA press release, EPA Confirms Building Managers Responsible for Lead-Based Paint Safety Requirements During Renovations(January 21, 2022) https://www.epa.gov/newsreleases/epa-affirms-building-managers-responsible-lead-based-paint-safety-requirements-when.

11 ID.

12 ID.

13 15 USC § 2615.

14 15 USC § 2615(a)(1).

15 ID. § 2615(b)(1).

16 Supra grade 10.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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