11 February 2021

New Guidance on Self-Disclosure of Violations Under EPA’s Audit Policy

Last week, the U.S. Environmental Protection Agency (EPA) issued new guidance related to its policy on Incentives for Self-Policing: Discovery, Disclosure, Correction and Prevention of Violations (the Audit Policy), 65 Fed. Reg. 19618 (April 11, 2000). The new guidance, titled EPA’s Audit Policy Program: Frequently Asked Questions (the 2021 FAQ), provides an update to interpretive guidance from 1997, 2007, and 2015 for self-disclosure of potential noncompliance.

The Audit Policy generally provides a mechanism for regulated entities to disclose potential noncompliance with federal environmental laws for an assessment of no or reduced penalties, subject to certain conditions. For penalty reductions, such disclosures must be the result of an environmental audit, voluntarily and promptly disclosed, and corrected with prevention of recurrence  From 1995 to 2020, over 10,000 entities voluntarily self-disclosed violations at nearly 28,000 facilities under one of EPA’s self-disclosed violation policies.

The 2021 FAQ includes answers to 49 frequently asked questions, synthesizing information from past guidance. It updates prior guidance for EPA’s eDisclosure system (released in 2015) while omitting details from past guidance that are no longer relevant, such as regarding hard-copy filings. Some of this includes expanding on the New Owner Audit Policy, effective in 2008, which potentially can provide relief from preacquisition civil penalties for new owners that seek timely coverage after closing a transaction. The 2021 FAQ reminds users that confidential business information (CBI) should not be submitted through the eDisclosure system, indicating that EPA will follow up for any additional information  In those cases, EPA will make arrangements for the submission of CBI.

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