Keep abreast of recent developments to provide the public broad and easy access to company-specific environmental inspection and compliance data. Know the information you must report and information that you may voluntarily report. Consider the benefits of voluntarily disclosing violations using EPA’s audit policy. Learn the steps to take if you receive a violation notice from EPA.

1. R E S U L T S F I R S T S M
N E W Y O R K • N E W J E R S E Y • F L O R ID A • C A L IF O R N IA • W A S H IN G T O N , D . C . • IL L IN O IS • G E O R G IA • P E N N S Y L V A N IA • W W W . P E C K L A W . C O M
Dave Scriven-Young
Peckar & Abramson, P.C.
Voluntarily Disclosing Violations
and Responding to Violation
Notices Amid Next Generation
Compliance Initiatives

2. Outline
(1) What is an environmental audit?
(2) How can businesses take advantage of U.S. EPA’s
Audit Policy?
(3) Developments Concerning U.S. EPA’s Audit Policy
(4) EPA Enforcement Process
(5) Notice of Violation
(6) Strategy for Responding to a Notice of Violation

3. What Is An Environmental Audit?

4. Environmental Auditing
Environmental Auditing is the process of determining
whether operations and practices are in compliance
with regulatory requirements, company policies and
procedures, and accepted standards.
It is a systematic, objective evaluation of facility
activities for a finite review period designed to:

5. Environmental Auditing
• Verify compliance with environmental regulations,
internal policies, and accepted practices.
• Evaluate the effectiveness of environmental
management systems in place, and
• Identify and assess any reasonably foreseeable risks
associated with hazardous conditions attributable to
company operations and prevent or mitigate such risks.

6. Goals of an Environmental Audit
• Identify and assess
environmental risks
• Optimize Resources
• Provide assurance to
senior management
• Increase environmental
awareness throughout the
company
• Identify and document
facility compliance status
• Improve overall
environmental
performance at facilities
• Assist facility
management

7. What Help Does A Company Need To Conduct An
Environmental Audit?

8. What Help Does A Company Need To
Conduct An Environmental Audit?
It depends on the company . . .

9. E-Discovery Process OverviewWhat Help Does A Company Need To Conduct An Environmental Audit?
It depends on the company . . .
• Plant Manager
• Environmental
Health & Safety
Manager
• Senior
Management
• Outside Environmental
Consultant
• Attorney (privilege,
audit policy letters,
negotiates with agencies)

10. How can businesses take advantage of
U.S. EPA’s Audit Policy?

11. What Is U.S. EPA’s Audit Policy?
• “Incentives for Self-Policing: Discovery,
Disclosure, Correction and Prevention of
Violations” (65 Federal Register 19,618)
• The goal of the policy is to safeguard human
health and the environment by providing
several major incentives for regulated entities
to voluntarily come into compliance with
federal environmental laws and regulations.

12. Benefits of U.S. EPA’s Audit Policy?
• No gravity-based penalties if all nine of the
Policy’s conditions are met.
– EPA retains the ability to collect economic benefit
received due to noncompliance.
– Reduction of gravity-based penalty by 75% where
all conditions met except detection of violation
through a systematic discovery process.
• No recommendation for criminal prosecution.
• No routine requests for audit reports.

13. Conditions of U.S. EPA’s Audit Policy?
1. Systematic Discovery of the Violation Through an
Environmental Audit or a Compliance Management
System.

14. Conditions of U.S. EPA’s Audit Policy?
2. Voluntary Discovery of the Violation—Was Not
Detected as a Result of a Legally Required
Monitoring, Sampling, or Auditing Procedure.

15. Conditions of U.S. EPA’s Audit Policy?
3. Prompt Disclosure of the Violation in Writing to U.S.
EPA Within 21 Calendar Days After Discovery.

16. Conditions of U.S. EPA’s Audit Policy?
4. Discovery and Disclosure Independent of
Government or Third-Party Plaintiff.

17. Conditions of U.S. EPA’s Audit Policy?
5. Correction and Remediation within 60 Calendar Days,
in Most Cases, From the Date of Discovery.

18. Conditions of U.S. EPA’s Audit Policy?
6. Agree to Take Steps to Prevent Recurrence of the
Violation.

19. Conditions of U.S. EPA’s Audit Policy?
7. Repeat violations are ineligible (i.e., the specific (or closely
related) violations occurred at same facility within past 3 years
or occurred as a part of a pattern at multiple facilities owned
or operated by the same entity within past 5 years).

20. Conditions of U.S. EPA’s Audit Policy?
8. Violation must not be excluded from Policy (e.g., those that
result in serious actual harm, present an imminent and
substantial endangerment, or violate an administrative or
judicial order or consent agreement).

21. Conditions of U.S. EPA’s Audit Policy?
9. Cooperate with EPA and Provide it with the
Information it Needs to Determine Policy
Applicability.

22. Federal Rule of Civil Procedure 34Developments Concerning U.S. EPA’s Audit
Policy
• New Owners
• EPA's Proposed Changes in 2012
• Change in EPA's Enforcement Efforts
• eDisclosure

23. New Owners
• “Interim Approach to Applying the Audit
Policy to New Owners” (73 Federal Register
44,991):
– Tailored Audit Policy incentives for new owners
that want to make a “clean start” at their recently
acquired facilities by addressing environmental
noncompliance that began prior to acquisition.

24. EPA's Proposed Changes in 2012
• April 30, 2012 National Program Manager Guidance
"Since implementation of the Audit Policy began in
1995, EPA‘s enforcement program has increased its
understanding of environmental compliance
auditing, and believes that internal reviews of
compliance have become more widely adopted by
the regulated community, as part of good
management. In addition, EPA has found that most
violations disclosed under the Policy are not in the
highest priority enforcement areas for protecting
human health and the environment."

25. EPA's Proposed Changes in 2012
• April 30, 2012 National Program Manager Guidance
"EPA believes it can reduce investment in the
program to a limited national presence without
undermining the incentives for regulated entities to
do internal compliance reviews to find and correct
violations. As we reduce investment in this program,
EPA is considering several options, including a
modified Audit Policy program that is self-
implementing."

26. Change in EPA's Enforcement Efforts
• EPA’s Reduced Enforcement Goals for 2014-2018
– 25% decrease in inspections and evaluations of
regulated entities
– 28% fewer civil and enforcement actions

27. Change in EPA's Enforcement Efforts
• Next Generation Compliance Initiative
"The most effective way to achieve compliance with
the law is to make it easier to comply than to
violate. EPA is using new technologies and lessons
learned about what drives compliance to reduce
pollution and improve results." Cynthia Giles,
Assistant Administrator for EPA's Office of
Enforcement and Compliance Assurance

28. eDisclosure
• eDisclosure: EPA’s Electronic Audit Policy Self-
Disclosure System
– Was used by facilities nationwide to disclose
violations of the Emergency Planning and
Community Right-to-Know Act (EPCRA)
– Was used by facilities in Region 6 states (Arkansas,
Louisiana, New Mexico, Oklahoma, and Texas) to
disclose violations of other environmental laws.

29. eDisclosure
• eDisclosure: EPA’s Electronic Audit Policy Self-
Disclosure System
– As of July 1, 2013, EPA decommissioned the
eDisclosure system.
– However, companies can make still make "paper"
disclosures.

30. eDisclosure
• June 2015: EPA announces an "eDisclosure portal"
– New, centralized, "Next Generation" web-based system
for more efficiently receiving and processing violations
disclosed to EPA under its self-disclosure policies.
– Targeted to launch in Fall 2015; Federal Register notice will
accompany launch and describe implementation.
– Will accept new disclosures involving almost all types of
civil violations, except certain EPCRA disclosures and New
Owner disclosures.

31. eDisclosure
• How Will It Work?
– Register with system
– Promptly disclose violations online within 21 days
of discovery
– Submit online Compliance Report certifying that
any noncompliance was timely corrected
(ordinarily within 60 days of submitting online
disclosure)

32. eDisclosure
• How Will Self-Disclosed Violations Be Resolved?
– Tier 1 Disclosures
• EPCRA violations that meet all Audit Policy or Small
Business Compliance Policy conditions, but not
including (1) CERCLA 103/EPCRA 304 chemical release
reporting violations; or (2) EPCRA violations with
significant economic benefit as defined by EPA.
• EDisclosure system will automatically issue an
electronic Notice of Determination confirming that the
violations are resolved with no assessment of civil
penalties, conditioned on the accuracy and
completeness of the submitter's certified eDisclosure.

33. eDisclosure
• How Will Self-Disclosed Violations Be Resolved?
– Tier 2 Disclosures
• Include: (1) all non-EPCRA violations; (2) EPCRA
violations where the violator can only certify
compliance with Audit Policy Conditions 2-9; and
(3) EPCRA/CERCLA violations excluded from Tier 1.
• EDisclosure system will automatically issue an
electronic Acknowledgement Letter confirming EPA's
receipt of the disclosure, and promising that EPA will
make a determination as to eligibility for penalty
mitigation if and when it considers taking an
enforcement action for environmental violations.

34. Should the Company Self-Disclose: Factors
to Consider
1. Ideally, only self-disclose violations for which you
can meet all factors in audit policy and that are
discovered through well-developed audits.
2. The five-year statute of limitations may bar EPA
from seeking penalties not discovered by EPA
within the statutory period.
3. Consider whether internal investigations should be
used.

35. EPA Enforcement Process

36. EPA Enforcement Process
(a) Notice of Violation: Indicates that EPA believes that
the company is in violation of the law and that it
should come into compliance or be prepared to
defend its actions in subsequent enforcement.
(b) Filing of Action: If negotiations fail, EPA files a civil
administrative action, civil judicial action, or
criminal action.
BEWARE Concurrent State Enforcement

37. Notice of Violation

38. Notice of Violation
• Facts (what the inspector found)
• Legal standard and how you violated that standard
• Process for next steps: Set up conference with EPA to
discuss alleged violation

39. Strategy for Responding to a Notice of Violation

40. Strategy for Responding to NOV
(A) Gather information to determine the cause of the
violation.
• Gather information internally and discuss with key
players involved in the process that was involved in
the violation.
• Gather information from EPA (request copies of
inspection report and any other documents relating
to the incident).

41. Strategy for Responding to NOV
(B) Determine if the problem is fixed and how to avoid
the problem in the future.
• If the problem has not been fixed, then determine
the timeline for fixing the problem.

42. Strategy for Responding to NOV
(C) How big will the potential penalty will be?
• Starting point is the statute. Usually a maximum
penalty plus factors to determine the amount of
penalty.
• Look at the penalty policy and figure out potential
penalty. Calculation includes economic benefit,
gravity, adjustments, litigation risk, and ability to
pay.

43. Strategy for Responding to NOV
(D) Set up meeting date and prepare letter:
• Your side of the story (what happened)
• What steps you took to prevent this specific problem
from occurring.
• What efforts you took to fix the problem after it
happened. If not fixed, provide a timeline.
• What efforts you will take to ensure that this
problem will not occur in the future.

44. Strategy for Responding to NOV
(E) PREPARE for Meeting with EPA
• EPA will give you the opportunity to make
presentation.
• Plant manager and senior team involved with the
process should plan to be there.
• Bring any documents relevant to defense or shows
that plan was in place to prevent problem from
occurring.

45. Strategy for Responding to NOV
• Discuss in advance who will make initial
presentation, which will tell your story on how the
problem occurred, what you did to prevent the
problem, how the problem was fixed or the timeline
for fix, how the problem will be prevented going
forward.
• Unless you intend to argue that the Company did
nothing wrong, be prepared to discuss settlement.

46. Strategy for Responding to NOV
(F) Meeting with EPA
• Initial presentation
• Questions and Answers
• Settlement Negotiations (Elements might include:
penalty, new compliance or monitoring program,
and/or Supplemental Environmental Project)

47. Questions
Dave Scriven-Young
Peckar & Abramson, P.C.
30 N. LaSalle Street, Suite 4126
Chicago, IL 60602
(312) 239-9722
dscriven-young@pecklaw.com
http://illinoisenvironmentallaw.com