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
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.
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.
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
Sample Documents for Use in Self-Disclosing Environmental
Violations under EPA's Audit Policy
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
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 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.