The EPA Audit Policy, "Incentives for Self-Policing: Discovery,
Disclosure, Correction and Prevention of Violations", has been in
effect since 1995. It safeguards human health and the environment by providing
incentives for regulated entities to come into compliance with the federal
environmental laws and regulations. The policy was designed to provide
major incentives for regulated entities that voluntarily discover, promptly
disclose, and expeditiously correct noncompliance, rendering formal EPA
investigation and enforcement action unnecessary. The Audit Policy reflects
the input of industry, trade associations, state environmental program
practitioners, and public interest groups.
Disclosures are often preceded by consultations between EPA and the regulated
entity, so that mutually acceptable disclosure details, and compliance
and audit schedules can be discussed. If policy conditions are met, most
penalties may be waived, and further civil or criminal prosecution may
not be pursued.
Incentives for Self-Policing Under the Audit Policy
No gravity-based penalties for disclosing entities that meet
all nine Policy conditions, including "systematic discovery" of the
violation through an environmental audit or a compliance management
system. Gravity-based penalties are that portion of the penalty over
and above the economic benefit. In general, civil penalties that EPA
assesses are comprised of two elements: the economic benefit component
and the gravity-based component. The economic benefit component reflects
the economic gain derived from a violator's illegal competitive advantage.
Gravity-based penalties are that portion of the penalty over and above
the economic benefit. They reflect the egregiousness of the violator's
behavior and constitute the punitive portion of the penalty. EPA retains
its discretion to collect any economic benefit that may have been
realized as a result of noncompliance.
Reduction of gravity-based penalties by 75% may be granted
to entities that meet all of the conditions except for "systematic
discovery" of the violation through an environmental audit or a compliance
management system.
No recommendation for criminal prosecution for entities that
disclose violations of criminal law and meet all applicable conditions
under the policy. "Systematic discovery" is not required to be eligible
for this incentive, although the entity must be acting in good faith
and adopt a systematic approach to preventing recurring violations.
EPA generally does not focus its criminal enforcement resources on
entities that voluntarily discover, promptly disclose and expeditiously
correct violations, unless there is potentially culpable behavior
that merits criminal investigation. When a disclosure that meets the
terms and conditions under the Audit Policy results in a criminal
investigation, EPA generally will not recommend criminal prosecution
for the disclosing entity, although the Agency may recommend prosecution
for culpable individuals and other entities.
No routine requests for audit reports from entities who disclose
under the Audit Policy. In general, EPA will refrain from routine
requests for audit reports. However, if EPA has independent evidence
of a violation, it may seek the information it needs to establish
the extent and nature of the violation and the degree of culpability.
Entities that satisfy the following conditions are eligible for Audit
Policy benefits. Even if your entity fails to meet the first condition
- systematic discovery - you can still be eligible for 75% penalty mitigation
and for no recommendation for criminal violations.
Systematic discovery of the violation through an environmental
audit or a compliance management system.
Voluntary discovery, that is, not through a legally required
monitoring, sampling or auditing procedure.
Prompt disclosure in writing to EPA within 21 days of discovery
or such shorter time as may be required by law. Discovery occurs when
any officer, director, employee or agent of the facility has an objectively
reasonable basis for believing that a violation has or may have occurred.
Independent discovery and disclosure, before EPA likely would
have identified the violation through its own investigation or based
on information provided by a third-party.
Correction and remediation within 60 calendar days, in most
cases, from the date of discovery.
Prevent recurrence of the violation.
Repeat violations are ineligible, that is, those that have
occurred at the same facility within the past 3 years or those that
have occurred as part of a pattern of violations within the past 5
years at another facility(ies) owned or operated by the same company;
if the facility has been newly acquired, the existence of a violation
prior to acquisition does not trigger the repeat violations exclusion.
Certain types of violations are ineligible such as those that
result in serious actual harm, those that may have presented an imminent
and substantial endangerment, and those that violate the specific
terms of an administrative or judicial order or consent agreement.
"Audit
Policy Update" Newsletter
The Audit Policy Update Newsletters, published by EPA's Office of Regulatory
Enforcement, Office of Enforcement and Compliance Assurance, give information
on the changes to the Audit Policy and other information relating to
its use.
"Enforcement
Alert" Newsletter
This is informational newsletter published by EPA's Office of Regulatory
Enforcement, Office of Enforcement and Compliance Assurance. It is intended
to inform and educate the public and the regulated community about important
environmental enforcement issues, recent trends, and significant enforcement
actions. It calls attention to such matters as the need for voluntary
corporate audits.
Sample Documents for Use in Self-Disclosing Environmental Violations
under EPA's Audit Policy
Sample
Status Report(PDF, 97.0KB, 5 pages)
Some companies have used this report to provide information to EPA
during the course of conducting an audit. The initial report, and
subsequent periodic progress reports, have helped identify issues
early in the auditing process and assisted in the overall progress
of the audit.
Sample
Disclosure Follow-up Letter(PDF, 98.4KB,
5 pages)
This is an example of what the Agency sends a company after receiving
a self disclosure pursuant to EPA's Audit Policy. The letter provides
companies with clear guidance on the kind of information needed by
EPA to better understand the potential violations and determine whether
a company's disclosure meets the conditions of the Audit Policy.
Audit Policy User's Survey (November 13, 1998)
EPA contracted with Science Applications International Corporation (SAIC)
to conduct a voluntary and confidential survey of companies that have
disclosed environmental violations under the EPA Audit Policy. The intent
of the survey was to aide EPA to better serve the regulated community
and to help EPA evaluate and improve the Audit Policy.
Some of the documents provided by EPA are Adobe Acrobat PDF
(Portable Document Format) Files. They can be viewed, and printed, with the
use of an Adobe Acrobat Reader.
