Looking at EPA Lead Regulations from a Different Angle
Let’s put down the plastic sheeting, hazardous materials bags, and personal protective equipment and, just for a moment, pick up our contracts. Much has been written about the EPA lead paint requirements that went into effect April 22. Like all construction trades, the window and door industry has been working to figure out and meet the new EPA rules covering work in pre-1978 buildings. The EPA’s requirements are detailed, specific, and finally becoming known to most in the industry. They are important and must be met.
But, if you perform or arrange for work covered by those rules, I want you to consider the “spillover effect” onto your contractual rights; and most importantly onto your right to get paid. We feel that the rules, while important unto themselves, are also going to immediately play a large role in your company’s risk analysis—apart from technical compliance with them. The legal spillover from these rules, whether intended or not, can present significant traps for the unaware. And we are going to take a quick peek into some of those issues here.
An Added Duty
Please understand that compliance with the EPA’s new rules is the law. Training, certification, and compliance are all mandatory. In truth the EPA’s rules have changed the definition of what is “workmanlike” with regard to pre-1978 homes. But, separate from the technical requirements of the law, what does it all mean from the broader perspective? To answer that question, consider what the EPA has said. In effect, it could be argued the EPA has determined people living in a home built before 1978 have a right to be protected from excessive contact with lead based paint products in their own homes that may be disturbed during construction. And, next consider that the EPA has arguably determined that those responsible for doing the work must provide this protection to these homeowners. This imposition of a right to protection and consequent responsibility for action is, in legal parlance, a “duty” attendant to the performance of the work.
Imposition of a duty has many consequences. Legal penalties for failure to meet the duty are clear; and in the case of the EPA, $35,000 per violation, per day is a step penalty. But putting that aside, it is beyond question that a duty impacts your legal rights in many other respects. Consider the impact in a contract scenario: As noted above, the nature of a workmanlike performance of a contact has changed. So, assume a company rushes to contract for a replacement project job without adjusting its contract language to account for the legal imposition of a new EPA-based duty. What can this mean for the contractor? It could mean a homeowner refuses to pay or delays payment when he/she believes they have discovered the contractor failed to meet a technical specification of the EPA rules. It could also mean homeowners attempt to adjust/renegotiate the contract price after contending they discovered a failure to comply. Many contractual issues remain; not the least of which is whether a contractual term specifying payment irrespective of a claimed violation of the EPA lead paint rules can be supported at law.
Apart from the contract scenario, negligence claims and tort actions are also ripe for contractors based upon the new EPA rules. Consider whether a party responsible for the work of the contractor can be sued for injuries when a homeowner’s toddler shows elevated levels of lead in a blood test, even if the contractor took the necessary EPA steps. Add to that the potential for presumed negligence (legally, “negligence per se”) because a contractor failed to take the requisite precautions and the potential for risk of exposure as multiplied exponentially. A claim is on its way.
“At least I’m insured,” you say. Are you? Insurance policies contain various triggers for coverage that are needed before an insurer will act. And even then, there are a host of exclusions to most policies that will try to reign in any potentially applicable coverage. So if there is property damage or bodily injury, and even when the failure to meet an EPA requirement actually is considered an “accident” under a policy (a normal element of trigger of coverage), there are prevalent pollution exclusions that may well apply to eliminate your insurance coverage.
Presuming your duty analysis has survived the contract, injury, and insurance claims, have you considered that your employees might now be the beneficiaries of that same duty? Compliance with OSHA (29 CFR 1926) and various state requirements relating to hazardous material exposure must be carefully evaluated to ensure that a company is not unduly jeopardizing its workers.
There are no magic-bullets to the issues above, but analysis and management are required. Careful consideration and planning can help limit these unintended, spillover consequences of the new EPA rules. Analysis itself is the first essential step for any company. Reviews of contract terms, conditions, and payment provisions are recommended any time new duties are imposed on a company. Likewise, policy reviews and broker engagement are advisable. The technical obligations of the new EPA requirements must be met, but the spillover issues that can arise from these obligations present equally troubling concerns for all companies. Proactive steps can help limit these issues.
You may now return to your lead-paint training class.