Overview of EPA's Audit Policy
EPA's Audit Policy offers incentives to private and federally-owned facilities when they disclose violations of environmental laws and regulations. To take advantage of these incentives, regulated entities must voluntarily discover, promptly disclose to EPA, expeditiously correct, and prevent recurrence of the violations.
Incentives for Disclosure
Penalty mitigation is a major incentive of disclosing violations under the Audit Policy. Regulated entities that disclose violations and meet the conditions of the Audit Policy will receive reductions in gravity-based fines. Gravity-based fines are penalties that are based on the severity of the violation. Entities meeting all nine of the Audit Policy's conditions will receive a 100 percent reduction in gravity-based fines. Entities meeting all conditions of the Policy, except for the requirement that the discovery occur through a systematic discovery process (such as an environmental audit), will still receive a 75 percent reduction in gravity-based fines. In all cases, EPA retains discretion to collect any economic benefit that may have been realized as a result of noncompliance. This economic benefit is separate from any calculated fines.
Additionally, if the conditions of the Audit Policy are met, EPA may decline to recommend criminal prosecution for entities that disclose criminal violations. Finally, under the Audit Policy, EPA reaffirmed its Environmental Auditing Policy Statement in effect since 1986, to refrain from routine requests for audit reports.
Eligibility Under the Audit Policy
Federal facilities seeking to avail themselves of the Audit Policy's incentives must ensure they meet each of the Policy's nine conditions. The Audit Policy's specific conditions are briefly summarized below. Refer to the text of the Audit Policy for full eligibility details.
Audit Policy Criteria:
- Systematic, voluntary, and independent discovery of the violation, outside of legally required monitoring, sampling, or auditing procedures;
- Prompt disclosure to EPA within 21 days;
- Correction and remediation of the issue within 60 days (generally) and must agree to take steps to prevent recurrence of the violation;
- Cooperation with EPA to resolve the issue; and
- Repeated same or closely-related violations and violations that result in serious actual harm or endangerment are not eligible for Audit Policy benefits.
Does the Audit Policy Work for Your Facility? – Key Points
If you are considering whether seeking Audit Policy incentives for disclosing a violation makes sense for your facility, consider these additional points:
1. Disclosure under the Audit Policy does not require affirmative acknowledgement of violations. By voluntarily disclosing violations, federal facilities and other regulated entities can disclose that they "may have" violated the law and still qualify for penalty mitigation under the Audit Policy; they do not have to affirmatively acknowledge that they have violated the law.
2. Even if the disclosure is not submitted to EPA within the 21 days, there may still be value in making the disclosure. The eDisclosure system is programmed to automatically issue an Ineligibility Letter if violations are disclosed more than 21 days after discovery, but this is not a decision on the merits as to whether such a self-disclosure may warrant penalty mitigation. The facility can upload additional documentation explaining the reason for the late disclosure. Subsequently, if EPA is considering whether to take an enforcement action, all relevant information, including the fact that the facility submitted a disclosure, will be reviewed and evaluated. Generally, disclosures demonstrate good faith and responsible self-policing.
3. Your facility may be able to develop internal protocols to more effectively meet the required 21-day timeframe. If a federal facility or other regulated entity is concerned about meeting the required 21-day timeframe to disclose violations, the facility may consider identifying the types of violations that can be disclosed efficiently, developing disclosure protocols, and taking other steps to ensure speedy internal processing.