Voluntary Disclosure of Environmental Violations
November 13, 2017

The USEPA and many States allow operators to voluntarily disclose violations of environmental laws and regulations that are found during an audit. This can involve air, water, waste and other environmental laws and regulations. These programs can be used protect the confidentiality of audit findings and reduce or eliminate monetary penalties provided the company meets certain criteria. Application of these laws/policies are usually on a case-by-case basis.

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To qualify, companies must promptly disclose and correct environmental violations and take steps to prevent recurrence of violations.

For States that have jurisdiction from the USEPA to administer and enforce the Federal environmental requirements, violations are typically reported to the State environmental agency. Most States have jurisdiction for Federal environmental regulations.

Depending on the potential violation and circumstances, some companies may want to consult an environmental attorney prior to voluntary disclosure.

Below are some aspects of typical voluntary disclosure programs.

Federal and State Voluntary Disclosure Resources

  • The USEPA uses a web-based system called eDisclosure  to submit and process violations disclosed to EPA under its self-disclosure policies
  • The USEPA maintains an online list of voluntary programs referred to as State Audit Privilege and Immunity Laws & Self-Disclosure Laws and Policies at: LINK 

Types of programs

  • Audit Privilege only – protects the confidentiality of communications relating to voluntary internal environmental audits.
  • Audit Mitigation/Immunity only – may mitigate or eliminate monetary penalties for administrative or civil violations
  • Audit Privilege and Mitigation/Immunity

Uses

Used for administrative and civil violations associated with environmental regulation applicability, permitting, emission controls, monitoring, testing, recordkeeping and reporting.

Violation Discovery Methods

  • Due diligence audits for property acquisitions – buyer and seller
  • In-house and third-party audits for single and multiple sites
    • Depending on the agency, a formal audit may be required to qualify for full audit privilege, mitigation and/or immunity
  • Violations found during routine and non-routine compliance surveys may be eligible for mitigation – depending on the violation and State involved

Restrictions

  • Not available for criminal proceedings
  • Some States require that the voluntary disclosure be a part of a formal audit process implemented by a company. Audit privilege is not typically used for incidental or randomly discovered permit violations
  • May not be used if audit conducted in bad faith
  • May not used if company does not take appropriate action or fails to correct issue in a timely manner
  • Some States (e.g., Texas) may require a notice of audit to qualify for audit privilege and immunity from penalties. The notice of audit may be waived if the audit is conducted for property acquisitions (e.g., TCEQ)
  • No immunity for violations that result in substantial economic benefit to the violator or violations that give the violator a clear advantage over its business competitors

Typical Process

  • Submit notice of audit to State agency based on Federal/State requirements (if required)
  • Conduct audit
  • Promptly disclose violations to agency using forms or format required by the State agency
  • Prepare action plan to come into compliance and prevent recurrence
  • Implement corrective action plan to come into compliance
  • Modify action plan as needed and request extensions as needed
  • Report to agency – progress reports and final report for corrective actions

Penalty Mitigation Factors

Some factors that affect monetary penalty determination and mitigation of monetary penalties include:

  • Severity of the violation
  • Actual or potential for harm
  • Extent of deviation from requirement
  • Economic benefit to violator
  • Size of the violator
  • Company compliance history
  • Corrective actions taken
  • Degree of cooperation
  • Timeliness of reporting
  • Degree of willfulness or negligence

Timeline to Correct Violations

  • Time allowed to correct violations varies whether a Federal issue or which State involved and feasibility of implementing corrective actions
  • Generally the timeline is from 60 to 90 days from date of discovery
  • Extensions to corrective action plans may be given based on the agency’s acceptance of the extension justification

HYBON/EDI Services and Products

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  • Gather descriptive/static data during facility site surveys and by working with your technical representatives. The data gathered is supplied to the client in completed spreadsheet forms.
  • Prepare spreadsheet forms to collect activity data for emission calculations.
  • Calculate emissions based on data supplied.

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