To disclose or not to disclose, that is the question.  Although self-disclosure will bring the matter to the Environmental Protection Agency’s attention, it is a great mechanism for reducing penalties for any enforcement action the EPA might bring.

The EPA’s audit policy was issued in 2000.  It offers penalty mitigation and other incentives for companies that discover, promptly disclose, and expeditiously correct environmental violations, as well as take steps to prevent future violations.

The EPA now uses an automated system, eDisclosure, for self-reporting violations.  In general, companies must report violations within 21 days of discovery and resolve them within 60 days, although extensions are readily given for returning to compliance to avoid penalties.

The EPA categorizes disclosures as Tier 1 or Tier 2.  Only Emergency Planning and Community Right-to-Know Act (EPCRA) violations are covered by Tier 1.  Under Tier 1, eligible disclosures will automatically receive an electronic Notice of Determination (eNOD) confirming that the violations are resolved with no assessment of civil penalties, conditioned on the accuracy and completeness of the submitter’s certified eDisclosure.

For Tier 2 violations, such as those under the Resource Conservation and Recovery Act (RCRA), the eDisclosure system will automatically issue an electronic Acknowledgement Letter (AL) confirming the EPA’s receipt of the disclosure, and promising that the EPA will make a determination as to eligibility for penalty mitigation if and when it considers taking an enforcement action for environmental violations.

As noted above, self-disclosures made outside of the 21 day window may still be considered by the EPA.  The automated system allows a facility to include additional documentation explaining the nature of its violations, the reasons for a late disclosure (such as that the audit is still undergoing review by management to accept or reject the findings of the audit), and the plan to remedy the violations.

It may be advisable to meet with EPA and/or state officials to work with their compliance team to correct the violations.  Companies that cooperate with government regulators and go “above and beyond” compliance often meet with more favorable treatment if any enforcement action is taken.  The company also will need to comply with any more stringent environmental requirements of the individual states where its facilities exist.

Companies engaged in self-audit should use the EPA electronic system to disclose violations found during an audit on a rolling basis, reporting them as they are discovered.  There are no cases where the EPA took an enforcement action against a company for violations reported through the system, even though only EPCRA violations are immune from penalty under the current policy.  Although the audit policy sets 60 days for returning to compliance, the system allows companies to request a global extension of time to certify compliance.