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GENERAL SECTION
Self-Disclosure Policies
Remove the “Sting” of Self-Auditing
Do you ever have a nagging doubt that your environmental compliance paperwork is in order? Are you afraid to self-audit because of the skeletons that may be in the closet? The USEPA and many state agencies have provided a means for companies to pursue compliance in a proactive way, many times with greatly reduced penalties if violations are discovered.
In Ohio, for example, the state audit privilege allows for companies to self-disclose violations found within 21 days of their discovery. (This time frame also applies to self-disclosure to the USEPA.) If the disclosure meets the requirements of the law, Ohio may guarantee that party administrative and civil penalty immunity. In order to receive immunity, the disclosing party must do the following:
1. Make the disclosure “promptly” after the audit is performed;
2. Make a “reasonable, good faith effort” to “achieve compliance as quickly as practicable;”
3. Achieve compliance “as quickly as practicable or within such period as is reasonably ordered by the Director;” and
4. Cooperate with the Director “in investigating the cause, nature, extent, and effects of the noncompliance.”
The disclosing party is NOT entitled to immunity if any of the above four criteria are not met, or if: (1) the disclosure was required by law, prior litigation or an order by a court or government agency; (2) the disclosing party knew or had a reason to know that a government agency has commenced an investigation or enforcement action that concerns a violation of “such laws involving the activity;” (3) within the previous 3-year period, the disclosing party “has committed significant violations that constitute a pattern of continuous or repeated violations of environmental laws, environmental related settlement agreements, or environmental related judicial orders and that arose from separate and distinct events;” (4) “with respect to a specific violation, the violation resulted in serious harm or in imminent and substantial endangerment to human health and the environment;” (5) “with respect to a specific violation, the violation is of a specific requirement of an administrative or judicial order;” or (6) the audit was not: initiated after March 13, 1997; completed before January 1, 2004; and completed within six months, unless an extension was approved.
Examples of fines that were either waived or reduced due to self-disclosure demonstrate the benefit of this program. For example, in Oregon, an eighty percent reduction was made to a fine applied to a paper plant for water quality violations. Five communications companies and a cheese manufacturer with nationwide facilities avoided penalties estimated at more than $23 million by making use of the USEPA’s audit policy.
Taking advantage of the self-audit program requires the company’s commitment to provide resources necessary to correct identified deficiencies. Typically an audit team is formed which consists of a business manager, environmental professional, and the company’s environmental legal counsel. Together the team will develop a scope for auditing, a plan for self-disclosure, and a schedule for correction of identified issues. The process allows the company to come into greater compliance with regulations while enjoying less burdensome financial penalties from the state agency and/or USEPA.
SUMMARY
Self-auditing and disclosure of violations allows companies to come into compliance with regulation without the sting of heavy gravity-based fines. If you would like to discuss your company’s options for self-auditing, please contact Tony Domanico or Emily Rynders at (513) 489-2255 or via e-mail at aid@paynefirm.com or ear@paynefirm.com. This and other Environmental Edge topics are available on our website at www.paynefirm.com
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