After a year and a half of public debate, EPA has recently issued its final policy on “Incentives for Self-Policing,” (otherwise known as the “Environmental Audit Policy”) which became effective on January 22, 1996. In response to a landslide of comments from the regulated community, EPA drafted the final policy to broaden protections to companies performing audits previously offered under the interim policy (published in April of 1995) in two important ways.
First, in order to be protected against enforcement actions, the final policy requires only that violations be voluntarily identified, not voluntarily reported. This greatly expands the number of disclosures that potentially qualify for protection under the policy. The old “voluntary reporting” standard provided protection for very few disclosures because most environmental violations are required to be reported under laws, regulations, or permits (and, therefore, cannot be voluntarily reported). The new “voluntary identification” standard merely excludes violations discovered through mandatory monitoring or sampling, as required under statute, regulation, permit, judicial or administrative order, or consent agreement.
Second, the final policy applies to violations discovered and disclosed as a result of any “systematic due diligence,” not just formal “audits.” This means that a company with a formal compliance program in place at the time of discovering a violation will likely qualify for complete immunity from civil penalty and avoid referral to DOJ for criminal investigation (assuming the company can reasonably show that the discovery of the violation is a result of “systematic due diligence”).
The final policy defines “due diligence” to include
First, in order to be protected against enforcement actions, the final policy requires only that violations be voluntarily identified, not voluntarily reported. This greatly expands the number of disclosures that potentially qualify for protection under the policy. The old “voluntary reporting” standard provided protection for very few disclosures because most environmental violations are required to be reported under laws, regulations, or permits (and, therefore, cannot be voluntarily reported). The new “voluntary identification” standard merely excludes violations discovered through mandatory monitoring or sampling, as required under statute, regulation, permit, judicial or administrative order, or consent agreement.
Second, the final policy applies to violations discovered and disclosed as a result of any “systematic due diligence,” not just formal “audits.” This means that a company with a formal compliance program in place at the time of discovering a violation will likely qualify for complete immunity from civil penalty and avoid referral to DOJ for criminal investigation (assuming the company can reasonably show that the discovery of the violation is a result of “systematic due diligence”).
The final policy defines “due diligence” to include
- written compliance policies, standards, and procedures that identify how employees are to meet environmental requirements;
- assignment of overall responsibility for overseeing compliance at each facility or operation;
- mechanisms for systematically assuring that the compliance policies, standards, and procedures are being carried out;
- efforts to train employees accordingly;
- appropriate incentives and disciplinary measures; and
- procedures from prompt and appropriate correction. Venable attorneys have assisted a wide variety companies in designing, implementing, and periodically evaluating environmental compliance programs.
Richard H. Mays and Gregory S. Braker have just completed one such program for a large real estate development company.
For more information on this subject or for a complimentary copy of EPA's final policy on Incentives for Self-Policing, please contact Thomas M. Lingan (TMLingan@Venable.com) at (202) 962-4800.